AUG 2026
The 1099-NEC threshold just tripled. Here's what actually changes.
For payments made after December 31, 2025, the reporting threshold for Form 1099-NEC and most of Form 1099-MISC rises from $600 to $2,000. It's the first change to that $600 number since 1954, and it comes from Section 70433 of the One Big Beautiful Bill Act (OBBBA), amending IRC §6041(a) and §6041A(a)(2). Starting in 2027, the $2,000 threshold adjusts annually for inflation.
If you pay contractors or vendors
You'll only need to issue a 1099-NEC to a nonemployee if you paid them $2,000 or more over the calendar year. Pay a freelancer $1,800 for a project in 2026? No form required. This is a real reduction in year-end paperwork, especially for businesses that work with a lot of small vendors.
One thing that doesn't change: backup withholding and W-9 collection are still good practice below the threshold. A missing or mismatched TIN can still create problems later if a vendor crosses $2,000 mid-year and you haven't been tracking it.
If you're the one getting paid
Fewer 1099s landing in your mailbox doesn't mean less taxable income. Every dollar you earn is still reportable, whether or not a form shows up to remind you. If you're used to using your 1099s as your income tracking system, this is a good year to build a separate habit — a simple spreadsheet or bookkeeping app — so smaller payments don't slip through.
The related change: 1099-K
OBBBA also reset the Form 1099-K threshold — the one third-party platforms like payment apps and marketplaces use — back to $20,000 and 200 transactions, reversing the phased-down $600 threshold that had been scheduled to take effect. So on two different fronts, 2026 is the year reporting thresholds moved up, not down.
Where it gets messy: states
Federal conformity doesn't mean automatic state conformity. Several states haven't updated their own filing thresholds to match, and a few still have $600 written into state statute or guidance. If you file in multiple states, don't assume the federal threshold is the only one that applies to you.
What to do now
Update your bookkeeping rules so vendor payments aren't flagged for a 1099 until they cross $2,000, not $600. Keep collecting W-9s regardless of amount. And if you're a contractor, don't let "no 1099" become "no tracking" — the IRS will still expect the income on your return.
General info only, not your specific advice. Every situation is different — if you want to talk through how this applies to yours, reach out.