Taxes
1099 Rules for 2026: The New $2,000 Threshold Explained
3 min read
For decades, businesses had to send a Form 1099 to contractors they paid $600 or more. That changed. Under the One Big Beautiful Bill Act signed in July 2025, the threshold for Forms 1099-NEC and 1099-MISC rises to $2,000 for payments made in 2026.
What changed
| Payments made in 2025 | Payments made in 2026 | |
|---|---|---|
| 1099-NEC (contractors) | $600 | $2,000 |
| 1099-MISC (rent, prizes, etc.) | $600 | $2,000 |
Starting in 2027, the $2,000 threshold will be adjusted for inflation each year.
The first filing season affected is January 2027, for payments made during 2026. The 1099s you filed in early 2026 for 2025 payments still used the $600 threshold.
Who gets a 1099-NEC?
You generally issue a 1099-NEC when your business pays $2,000 or more during 2026 to:
- An independent contractor or freelancer
- A sole proprietor or single-member LLC
- A partnership or multi-member LLC
- An attorney (attorneys get a 1099 even if they're incorporated)
You generally don't need one for payments to C corporations or S corporations (except attorneys and a few other exceptions), or for payments made by credit card or a payment app like PayPal, which are reported by the payment processor instead.
Deadlines
Form 1099-NEC is due to both the contractor and the IRS by January 31 of the following year. For 2026 payments, that's January 31, 2027 (or the next business day).
What didn't change
- Income is still taxable. Contractors must report all income, whether or not they receive a 1099.
- Backup withholding reporting still applies regardless of amount.
- Collect a W-9 before you pay anyone. You need the contractor's legal name, tax classification and taxpayer ID either way.
Practical tips for 2026
- Keep collecting W-9s from every contractor, even small ones. You won't know at the start of the year who will cross $2,000.
- Track payments by vendor in your bookkeeping software. Year-end reports will show who crossed the threshold.
- Pay contractors by card or app where it makes sense, which may shift reporting to the payment platform.
- Don't forget state rules. Washington doesn't have its own 1099 filing requirement for most businesses, but other states may.
If you're the contractor
You'll receive fewer 1099s if clients paid you under $2,000. That doesn't change your tax. Keep your own record of all income, including cash and app payments.
The bottom line
The new $2,000 threshold means less paperwork for many small businesses, starting with the January 2027 filing season. Keep collecting W-9s, track vendor payments monthly, and let your bookkeeper prepare 1099s from clean records.
Need help getting this right? TRIG Bookkeeping & Tax Services helps new business owners in Washington with company registration, monthly and annual bookkeeping, and government compliance. Contact us to talk about your business.
This article is general information, not legal or tax advice for your situation. Tax rules and fees change, so confirm current details with the IRS, the Washington Department of Revenue, or a qualified professional.