Art Festival Newsletter | March 2026 | | |
The tax code is shifting again
Here’s what you should keep in mind
Between selling online, taking commissions, teaching workshops, traveling to shows, hiring help, and juggling side gigs, we live in the part of the tax system where “small” rule changes can create real headaches (or opportunities). Several recent federal changes directly affect how artists get paid, what gets reported, and which deductions are worth planning around.
Below is a practical, artist-centered overview of the biggest changes and what to do next.
Payment platforms and tax forms - 1099-K
If you sell work through Etsy, Square, PayPal, Venmo (business profile), Shopify Payments, etc., you’ve probably been bracing for the infamous $600 1099-K reporting threshold.
What changed: A 2025 law (the One Big Beautiful Bill Act) reverted the Form 1099-K reporting threshold back to the older standard: more than $20,000 and more than 200 transactions. The IRS issued updated guidance confirming this threshold.
Why it matters
- You still owe tax on income whether a form is issued or not, but fewer surprise forms tends to reduce confusion and mismatched reporting.
Do this now
- As always, keep clean bookkeeping (gross sales, fees, shipping collected, refunds, sales tax collected/remitted).
- If you do receive a 1099-K, reconcile it to your own records—platform forms usually report gross amounts (before fees/refunds).
Hiring help got a little less paperwork-heavy (but only slightly)
Many artists pay occasional help: booth assistants, installers, photographers, retouchers, web designers, bookkeepers, studio assistants.
What changed: The same 2025 law increased the federal reporting threshold for Form 1099-NEC (nonemployee compensation) and Form 1099-MISC (miscellaneous payments) from $600 to $2,000, effective for payments made in calendar year 2026 (with inflation indexing after).
- If you pay an assistant $900 in 2026, federally you may not need to issue a 1099-NEC (depending on the exact facts and the payee).
- States can have different rules and some states still expect reporting at $600 or have their own thresholds.
Do this now
- Keep using W-9s. The paperwork threshold changing doesn’t change the need to properly classify workers.
- Track vendor totals by calendar year so you know who crosses the line.
Individual tax rules are changing:
For years, artists operating as sole proprietors or single-member LLCs have lived under Tax Cuts and Jobs Act (TCJA) rules that were scheduled to sunset at the end of 2025. A 2025 law is widely reported as making many TCJA individual provisions permanent (with modifications).
- Tax brackets/rates and the larger standard deduction influence whether itemizing makes sense and how costly your net profit is.
- If you have higher income years (big commission, strong festival season), marginal rates and deduction structure matter more.
One especially “artist-relevant” TCJA provision:
The Qualified Business Income (QBI) deduction (Section 199A)
This is the deduction that can allow certain pass-through business owners to deduct up to 20% of qualified business income, subject to limits and income thresholds. The IRS describes this as Section 199A.
Do this now
- If your income swings widely year to year, talk with a tax pro about whether QBI planning (entity choice, retirement contributions, timing income/expenses) helps you.
- Don’t assume you automatically qualify—limits can apply based on income and other factors.
Travel and mileage: the IRS increased the 2026 business mileage rate
The IRS set the 2026 business standard mileage rate at 72.5 cents/mile, up from 70 cents/mile in 2025.
Do this now
- Track mileage contemporaneously (app or log). The deduction lives or dies on documentation.
- If you switch between standard mileage and actual expenses, do it carefully—rules about switching can affect future options.
Retirement rules: 2026 brings an important shift for higher earners using “catch-up” contributions (always hopeful!)
Many self-employed artists and arts administrators use retirement accounts to reduce taxable income in strong years.
IRS guidance under SECURE 2.0 is moving forward, and rules around Roth catch-up contributions have been clarified in final regulations. A key practical takeaway highlighted in 2025–2026 coverage: beginning in 2026, some higher-wage participants may be required to make catch-up contributions on a Roth basis (depending on plan type and wages).
Do this now
- If you’re self-employed: ask your retirement provider how SECURE 2.0 changes interact with your SEP, SIMPLE, Solo 401(k), etc.
- If you’re employed by an arts org: check whether your plan offers Roth catch-up and how it will be administered.
A quiet but real change: new/updated reporting fields on information returns
The IRS has also updated certain information returns (including 1099 forms) to accommodate new reporting categories tied to the 2025 law (for example, tips and related codes on some forms).
Most of us won’t be affected directly by “tips” reporting unless they’re in a tipped occupation, but the larger point is: forms are changing, and software/platforms will follow.
Do this now
- If you notice a “new box” on a tax form, don’t ignore it—review what it represents.
Practical checklist for artists (2026-ready)
For online sales
- Reconcile platform payouts to gross sales monthly.
- Save 1099s, but treat them as inputs
For festivals and travel
- Start a mileage log now (72.5¢/mile in 2026).
- Keep receipts that support business purpose (parking, tolls, shipping, booth supplies).
For contracting help
- Collect W-9s before paying anyone.
- Track totals per person/vendor for the year; 1099-NEC/MISC threshold is higher federally in 2026, but states may differ.
For tax planning
- If your income is volatile, discuss QBI and retirement contributions with a tax pro—those two levers often matter most for artists.
This article is intended for general education, not legal or tax advice.
| | | Is It an Expense or Inventory?
A tax reality check
If you sell your work at juried art and craft festivals, your business runs on a very different rhythm than a traditional studio practice. You build inventory months before show season, buy materials in bulk, travel constantly, and carry unsold work from one show to the next. All of that makes one tax question especially important—and frequently misunderstood:
Is it an expense, or is it inventory?
This distinction quietly affects how much tax you owe, how your profit looks on paper, and how stressful tax season becomes. For festival artists, getting this right is less about accounting theory and more about accurately reflecting how your business actually works.
A simple way to think about it is to ask one question: Does this item end up in a piece that goes into my booth for sale? If the answer is yes, it’s inventory. If the answer is no, it’s an expense.
Inventory is anything that becomes part of a sellable piece. Clay, glaze, paint, canvas, wood, metal, fiber, resin, jewelry components, and frames sold with the artwork all fall into this category. The key thing festival artists often forget is that unsold work is still inventory, even after multiple shows. Inventory does not reduce your taxable income until the piece sells.
Expenses, on the other hand, are the costs that allow you to show and sell your work but are not sold themselves. Booth fees, jury fees, electricity, travel, mileage, hotels, shipping, tent and display systems, lighting, signage, studio rent, tools, marketing, websites, credit card fees—all of these are legitimate business expenses. If it helps you get to the show or present your work, but does not leave with the customer, it is almost always an expense.
Where festival artists get stuck is in the gray areas. Frames are inventory if they are sold with the artwork, but expenses if they are reused as display. Bulk materials purchased ahead of show season are not automatically expenses just because they were bought early. If you buy materials in January and only use part of them to create sellable work that year, only the portion tied to sold work becomes deductible through Cost of Goods Sold. The rest remains inventory until it is used and sold.
This is where Cost of Goods Sold (often abbreviated as COGS) comes into play. COGS is how inventory actually turns into a deduction. Instead of expensing materials when you buy them, inventory is deducted when the work sells. This is especially important for festival artists because it smooths out income over the year. A big sales weekend does not artificially inflate profit if it includes work made months earlier, and a slow show does not look like a loss if the inventory remains available for future sales.
The Internal Revenue Service does allow flexibility for small businesses, including artists, to use simplified inventory methods when full-scale accounting would be overly complex. This does not mean ignoring inventory or expensing everything. It means choosing a reasonable, consistent system that reflects the reality of a festival-based business.
The most common mistakes festival artists make are expensing all materials immediately, failing to count unsold work at year end, treating booth display equipment as inventory, assigning a dollar value to their labor, or changing methods from year to year. Consistency matters far more than precision.
The good news is that you do not need complex software to do this well. At minimum, track what materials you purchase, estimate what materials went into work that actually sold, count what remains unsold at the end of the year, and keep inventory costs separate from show and travel expenses. A spreadsheet, basic accounting software, or even a well-maintained notebook can work if it is used consistently.
Beyond taxes, understanding the difference between expenses and inventory gives you something even more valuable: clarity. Clean records help you see which shows are truly profitable, price work more confidently, and understand whether your production volume matches demand. It reduces financial stress after a slow weekend and gives you better information heading into the next season.
The bottom line for festival artists is simple. If it ends up on the wall, table, or pedestal for sale, it’s inventory. If it helps you get to the show or present the work, it’s an expense. When in doubt, ask yourself: Does this go home with the customer—or back in the van with me?
That question will guide you correctly almost every time.
| | |
LAST CHANCE to Join Us in Texas for the Art Festival Directors Conference April 16–17
followed by the award-winning Lubbock Arts Festival, April 18–19
This spring, gather with fellow art-festival directors from across the country for two energizing days of learning, idea-sharing, and meaningful connection. The Art Festival Directors Conference is created by directors, for directors - practical, candid, and focused on the realities of producing exceptional events.
Stay for the weekend and experience the Lubbock Arts Festival firsthand, one of Texas’s premier cultural events and a living case study in best practices. From artist relations and sponsorship strategy to logistics, marketing, and patron engagement, you’ll see what works on the ground and in real time.
Why Lubbock?
The festival has earned four consecutive “Best in Texas” awards from the Texas Festivals & Events Association (2021–2024) and two “Grand Pinnacle” awards from the International Festivals and Events Association (2021, 2023).
Conference Highlights
Festival management and operations
Marketing and audience growth
Community engagement and sponsorships
Grant writing strategies
AI tools for art show directors
Presentation of the 14th Annual State of the Artist Survey
If you’re looking to collaborate with peers, spark new ideas, and strengthen your festival for the seasons ahead, this is the conference to put on your calendar.
Save the date and join us in Texas.
Conference Chairs
Elizabeth Grigsby, Executive Director, Lubbock Arts Alliance
Cindy Lerick, President, Art of Events LLC
Robin Markowitz, Executive Director, Art-Linx
| |
Festival Season Bookkeeping Checklist
A practical, no-nonsense guide for working festival artists
| |
|
Festival season moves fast. Shows blur together, receipts pile up, and bookkeeping often becomes something you promise you’ll “catch up on later.” This checklist is designed to help festival artists stay organized during the season—not after—so tax time is calmer and your business decisions are clearer.
You don’t need to do everything perfectly. You do need a system you can repeat.
Before the season starts
Set yourself up once so you’re not scrambling mid-season.
- Choose one bookkeeping method
- Spreadsheet, accounting software, or a simple ledger—just pick one and stick with it all season.
- Separate business and personal money
- Use a dedicated business bank account and payment apps wherever possible. Mixing funds creates confusion later.
- Create basic categories
- At minimum:
- Show fees
- Travel (mileage, hotels, tolls)
- Inventory materials
- Booth/display expenses
- Marketing and photography
- Equipment and repairs
- Decide how you’ll track inventory
- You don’t need perfection—just consistency. Decide how you’ll estimate materials used in sellable work.
- Set up mileage tracking
- App, notebook, or spreadsheet. Start on day one.
Before each show
- Record the show name, location, and dates
- Save or photograph your booth fee and jury fee receipts
- Note expected expenses (hotel nights, fuel, parking)
- Make sure payment systems are ready (Square, PayPal, etc.)
During the show
- Track daily gross sales (cash and digital)
- Keep cash sales notes
- Save parking, toll, and food receipts if business-related
- Note inventory that sold unusually well or poorly (this helps later)
Immediately after each show (within 48 hours)
This is where most artists fall behind—don’t.
- Enter gross sales by show
- Enter booth-related expenses
- Log mileage for travel to and from the show
- Upload or file receipts
- Make a quick note:
- Was this show profitable? Too early to tell? Why?
You don’t need final answers—just observations while they’re fresh.
Monthly check-in (critical)
Once a month, step back.
- Reconcile bank deposits with recorded sales
- Review inventory materials purchased vs used
- Separate inventory costs from expenses
- Check totals for:
- Show fees
- Travel
- Materials
- Set aside money for estimated taxes, especially after strong months
This is where festival artists avoid April panic.
Mid-season reality check
Halfway through the season, ask yourself:
- Which shows are clearly profitable?
- Which shows are questionable?
- Are certain materials costing more than expected?
- Is inventory moving—or piling up?
Good bookkeeping turns gut feelings into informed decisions.
End-of-season wrap-up (before year-end)
Don’t wait until January.
- Count unsold inventory
- (It’s still inventory, even if it didn’t sell.)
- Estimate materials used for work that sold
- Separate display equipment from inventory
- Review income spikes that may affect estimated taxes
- Make notes about:
- Shows to repeat
- Shows to drop
- Pricing adjustments for next year
This information is gold when planning the next season.
What this protects you from
Following this checklist helps prevent:
- Expensing all materials incorrectly
- Forgetting unsold inventory
- Underreporting income
- Overpaying taxes in good years
- Making emotional decisions based on incomplete numbers
It also makes conversations with a tax professional faster and less expensive.
A final reminder for festival artists
The Internal Revenue Service does not expect artists to run warehouse-level accounting systems. It does expect reasonable, consistent records that reflect how your business actually operates.
A simple system used all season beats a perfect system used once.
| | | | |
Contact Robin Markowitz at Robin@Art-Linx.com
The Art-Linx website has the most current Call to Artist information
www.Art-Linx.com
Cartoons created by Art-Linx using an ai program
| | | | |
