For years, the rule of thumb was simple: if you paid a contractor $600 or more during the year, you sent them a Form 1099-NEC. That rule has changed. Under the tax law signed in July 2025, the reporting threshold for Forms 1099-NEC and 1099-MISC rises to $2,000 for payments made in 2026 and later.
What changed
For payments made during 2026, you generally only need to issue a 1099-NEC or 1099-MISC when total reportable payments to a person reach $2,000 or more for the year. Those forms are filed in early 2027. Starting after 2026, the $2,000 threshold is scheduled to be adjusted for inflation.
What did not change
- 2025 payments still use $600. Forms filed in January 2026 for 2025 payments follow the old $600 threshold.
- The deadline is the same. Form 1099-NEC is still due to recipients and the IRS by January 31.
- Income is still taxable. The threshold only decides who receives a form. Contractors must report all of their income, whether or not they receive a 1099.
- W-9s still matter. Collect a W-9 from every contractor before you pay them, so you have a correct name and taxpayer ID if a form is needed.
What about Form 1099-K?
The same law returned the Form 1099-K threshold for payment apps and online marketplaces to more than $20,000 and more than 200 transactions, rather than the lower thresholds that had been planned.
What small businesses should do now
- Keep collecting W-9s from every contractor up front.
- Track payments per contractor in your bookkeeping software throughout the year.
- Review totals in early January and confirm who crosses the $2,000 threshold.
- Remember that if you file 10 or more information returns in total, you must file them electronically.
If you would like this handled for you, our 1099 filing service covers W-9 collection, preparation, IRS e-filing, and recipient copies. Clean monthly bookkeeping makes year-end 1099s quick and accurate.
This article is general information, not tax advice for your specific situation.