The One Big Beautiful Bill Act raised the 1099-NEC reporting threshold from $600 to $2,000, effective for payments made in 2026. If you paid a contractor less than $2,000 during the 2026 calendar year, you do not file a 1099-NEC for them. The change affects your February 2027 filings.
The $600 reporting threshold for Form 1099-NEC had been in place since 1954, never once adjusted for inflation. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, raised it to $2,000, effective for payments made on or after January 1, 2026.
You will not feel this change until filing season 2027. Payments made during the 2026 calendar year are reported on 1099-NEC forms due February 1, 2027. That is the first batch of filings governed by the new $2,000 threshold.
Payments made through December 31, 2025 are still subject to the old $600 threshold. If you filed 1099-NEC forms in early 2026 for 2025 payments, those were filed under the prior rules. Nothing changes retroactively.
| 2025 tax year and prior | 2026 tax year onward | |
|---|---|---|
| Reporting threshold | $600 | $2,000 (inflation-adjusted annually starting in 2027) |
| Who set the threshold | Internal Revenue Code, unchanged since 1954 | One Big Beautiful Bill Act (OBBBA), signed July 4, 2025 |
| When do you feel the change | N/A | Payments made on or after January 1, 2026. First 1099-NEC filings affected: February 1, 2027 |
| Inflation adjustment | None. The $600 limit never changed. | Adjusted annually in $100 increments starting with tax year 2027. IRS announces the figure each fall. |
| W-9 collection requirement | Required before first payment | Same. No change. |
| Contractor's tax obligation | All income taxable, regardless of whether a 1099 is received | Same. All income taxable, regardless of threshold. |
Add up all payments you made to a single contractor during the 2026 calendar year. If the total is $2,000 or more, file a 1099-NEC. If the total is under $2,000, no filing is required at the federal level.
The threshold applies per contractor, per calendar year. A contractor you paid $800 in March and $900 in October received $1,700 total. No 1099-NEC required. A contractor you paid $800 in March and $1,400 in October received $2,200 total. File a 1099-NEC for $2,200.
The form reports the full annual total, not just the amount above the threshold. If the total is $2,200, Box 1 of the 1099-NEC shows $2,200.
The IRS has anti-payment-splitting provisions in the OBBBA. You cannot split payments across multiple entities or multiple periods to keep a single contractor's total under $2,000 and avoid the filing requirement. The IRS can aggregate related payments when a clear avoidance pattern exists.
No. Collect a W-9 from every contractor before the first payment, regardless of how much you expect to pay them. The $2,000 threshold determines whether you file a 1099-NEC at year-end. It has no effect on when or whether you need a W-9 on file.
A project that starts at $1,200 can grow. Scope expands, invoices add up. If you do not have a W-9 on file when total payments cross $2,000, you face a backup withholding obligation retroactively applied to the payments that pushed you over the threshold.
See What to Do If a Contractor Refuses to Provide a W-9 for what to do when a contractor will not comply.
Yes. The reporting threshold determines your filing obligation as the payer. It has nothing to do with the contractor's tax obligation. Every dollar a contractor earns is taxable income, whether or not they receive a 1099-NEC.
A contractor who received $1,500 from you in 2026 owes income tax and self-employment tax on that $1,500. The absence of a 1099-NEC does not make the income non-taxable. The IRS expects contractors to report all income on their Schedule C regardless of whether they receive a form.
Contractors who rely on 1099-NEC forms to track their income will need to maintain their own records more carefully under the new threshold. Fewer forms from clients does not mean less income to report.
Yes, in a limited way. Backup withholding at 24 percent is triggered when a contractor fails to provide a valid TIN and payments are reportable. Under the old rules, backup withholding could apply once payments crossed $600. Under the new rules, it applies once payments cross $2,000.
The practical result: a contractor who has not provided a W-9 and receives only $1,500 from you in 2026 does not trigger backup withholding at the federal level, because total payments did not reach the $2,000 reporting threshold. The same contractor in 2025 would have triggered withholding at $601.
Once total payments reach $2,000, backup withholding applies to all payments made without a valid TIN on file, including the amounts paid before the threshold was crossed.
Starting with the 2027 tax year, the $2,000 threshold adjusts annually for inflation in $100 increments. The IRS uses 2025 as the base year for the inflation calculation and announces the adjusted amount each fall for the following tax year.
The 2027 adjusted threshold had not been published at the time this article was written. Verify the current inflation-adjusted figure at IRS.gov before each filing season.
The inflation adjustment means the threshold will not become outdated the way the old $600 limit did. That figure was set in 1954 and never changed, which is why so many small payments became reportable over time as wages and contractor fees grew.
Yes. The OBBBA raised the threshold for 1099-MISC to $2,000 as well, effective for payments made in 2026. The same per-payee, per-calendar-year calculation applies.
Two 1099-MISC categories retain their own separate thresholds that were not changed by the OBBBA:
All other 1099-MISC boxes are subject to the new $2,000 threshold for 2026 and later tax years.
No changes are needed to your Tax Forms Helper account or settings. The software applies the correct threshold rules based on the tax year you select. When you enter 2026 data, the $2,000 threshold governs which forms require filing.
When reviewing your contractor records at year-end, flag any contractor whose total 2026 payments are $2,000 or more. Those are the contractors who need a 1099-NEC. Contractors with totals below $2,000 do not.
When you are ready to enter your 2026 data and file, see Adding, Editing, or Deleting a 1099 to get started, and How to eFile with the IRS or SSA when you are ready to submit.
Your 2026 threshold is $2,000. Collect W-9s as you always have, add up each contractor's annual total, and file for everyone who crossed the line.
For payments made on or after January 1, 2026. The One Big Beautiful Bill Act, signed July 4, 2025, raised the threshold from $600, a figure unchanged since 1954. You first feel it in filing season 2027, because 2026 calendar-year payments are reported on 1099-NECs due February 1, 2027. Payments through December 31, 2025 remain under the old $600 threshold, and nothing changes retroactively.
Add up all payments to a single contractor across the 2026 calendar year. At $2,000 or more you file a 1099-NEC; under $2,000 no federal filing is required. The form reports the full annual total, not just the amount above the threshold, so a $2,200 total shows $2,200 in Box 1. The OBBBA also has anti-payment-splitting provisions, so payments cannot be split to keep a contractor under the line.
Yes. The threshold determines your filing obligation as the payer and has nothing to do with the contractor's tax obligation. Every dollar earned is taxable whether or not a 1099-NEC is issued, and the IRS expects contractors to report all income on Schedule C. Contractors who relied on 1099s to track income will need to keep their own records more carefully.
Yes. The OBBBA raised the 1099-MISC threshold to $2,000 as well for payments made in 2026, using the same per-payee, per-calendar-year calculation. Two categories keep their own separate thresholds: Box 2 royalties and Box 8 substitute payments in lieu of dividends or interest both still require reporting at $10 or more.
Subject to change. Verify the current inflation-adjusted threshold and any further OBBBA guidance at IRS.gov or the relevant government site.
For payments made on or after January 1, 2026. The One Big Beautiful Bill Act, signed July 4, 2025, raised the threshold from $600, a figure unchanged since 1954. You first feel it in filing season 2027, because 2026 calendar-year payments are reported on 1099-NECs due February 1, 2027. Payments through December 31, 2025 remain under the old $600 threshold, and nothing changes retroactively.
Add up all payments to a single contractor across the 2026 calendar year. At $2,000 or more you file a 1099-NEC; under $2,000 no federal filing is required. The form reports the full annual total, not just the amount above the threshold, so a $2,200 total shows $2,200 in Box 1. The OBBBA also has anti-payment-splitting provisions, so payments cannot be split to keep a contractor under the line.
Yes. The threshold determines your filing obligation as the payer and has nothing to do with the contractor's tax obligation. Every dollar earned is taxable whether or not a 1099-NEC is issued, and the IRS expects contractors to report all income on Schedule C. Contractors who relied on 1099s to track income will need to keep their own records more carefully.
Yes. The OBBBA raised the 1099-MISC threshold to $2,000 as well for payments made in 2026, using the same per-payee, per-calendar-year calculation. Two categories keep their own separate thresholds: Box 2 royalties and Box 8 substitute payments in lieu of dividends or interest both still require reporting at $10 or more.
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Reduce the 250-return threshold enacted in prior regulations to generally require electronic filing by filers of 10 or more returns in a calendar year. The final regulations also create several new regulations to require e-filing of certain returns and other documents not previously required to be e-filed.
Require filers to aggregate almost all information return types covered by the regulation to determine whether a filer meets the 10-return threshold and is required to e-file their information returns. Earlier regulations applied the 250-return threshold separately to each type of information return covered by the regulations.
Eliminate the e-filing exception for income tax returns of corporations that report total assets under $10 million at the end of their taxable year, and require partnerships with more than 100 partners to e-file information returns, and they require partnerships required to file at least 10 returns of any type during the calendar year to e-file their partnership return.
Corrections must be filed the same way the original was submitted. If you eFile the original then you must eFile the correction. If you mailed in the original then you must mail in the correction.
Do not cut or separate Copies A of the forms that are printed two or three to a sheet, except for Form W-2G. Generally, Forms 1097, 1098, 1099, 3921, 3922, and 5498 are printed two or three to an 8" x 11"sheet. Form 1096 is printed one to an 8" x 11" sheet.
These forms must be submitted to the IRS on the 8" x 11" sheet. If at least one form on the page is completed, you must submit the entire page. Forms W-2G are an exception and may be separated and submitted as single forms. Send your forms to the IRS in a flat mailing (not folded).
Do not staple, tear, or tape any of these forms. It will interfere with the IRS’s ability to scan the documents.
Pinfeed holes on the form are not acceptable. Pinfeed strips outside the 8" x 11" area must be removed before submission without tearing or ripping the form. Substitute forms prepared on continuous feed or strip form paper must be burst and stripped to conform to the size specified for a single sheet (8" x 11") before they are filed with the IRS.
Do not use a form to report information that is not properly reportable on that form. If you are unsure of where to report the data, call the information reporting customer service site at 1-866-455-7438 (toll free).
Do not submit anything other than red ink copies to the IRS.
Use the official forms or substitute forms that meet the specifications in Pub. 1179. If you submit substitute forms that do not meet the current specifications and that are not scannable, you may be subject to a penalty for each return for improper format. All of Adam’s tax forms meet the proper requirements, so use us as a resource.
Do not use dollar signs ($) (they are pre-printed on the forms), ampersands (&), asterisks (*), commas (,), or other special characters in money amount boxes.
Do not use apostrophes (’), asterisks (*), or other special characters on the payee name line.
No photocopies of any form are acceptable.
Do not print plain ink copies of your W-2 copy A or W-3 form. If a box doesn't apply to you, leave it empty.
Do not add "0".
Do not omit the decimal point and cents from entries.
Do not mistakenly check the “Retirement plan” checkbox in box 13. See page 22 of this IRS PDF for Retirement plan details.
Do not misformat the employee’s name in box e. Enter the employee’s first name and middle initial in the first box; his or her surname in the second box; and his or her suffix (such as “Jr.”) in the third box (optional).
Do not enter the incorrect employer identification number (EIN) or the employee’s SSN for the EIN.
Do not cut, fold or staple Copy A paper forms mailed to SSA.
Do not mail any copy other than Copy A of Form W2 to the SSA.
File the correct form with the correct amount, code, checkbox, name or address, and check the “CORRECTED” box. This overwrites what you originally filed with the IRS under that person or company’s name and TIN. Send the corrected form to the recipient and prepare the red Copy A to send to the IRS with the Form 1096 transmittal if you’re paper filing. If you also had the wrong recipient/payee name or TIN do a Type 2 correction instead.
For Type 2 errors, either the recipient/payee name and/or the TIN are wrong or you used the wrong form (like a 1099-MISC instead of a 1099-NEC). Action: This is a two-step process. First, you must zero out what you filed with the IRS under the wrong name/TIN and then file the new form.
Step 1
File a form with the CORRECTED box checked and the exact same payer and recipient information as on the incorrect form, but with all the amounts as zeros. This will remove the originally filed form from the IRS records.
Step 2
File a new Form 1099 with the right information as an originally filed form (not a corrected form).
Incorrect Payer Name, Payer TIN, or both Action: Write a letter to the IRS.
If you filed with the wrong payer name (yours or your client’s name/company name) or the wrong payer taxpayer identification number (TIN), you don’t need to send in a corrected form.
Instead, you should write a letter containing the following information:
Name and address of the payer
Type of error (including the incorrect payer name/TIN that was reported)
Tax year Payer TIN Transmitter Control Code (if you eFiled),
Type of return, Number of payees, Filing method (paper or eFiling)
You have exceeded the IRS paper filing threshold and are required to file electronically.
