Beginning with tax year 2026, the One Big Beautiful Bill Act (OBBBA) raises the 1099 reporting threshold to $2,000 and adjusts it for inflation each year going forward.
The threshold hasn’t budged since 1954, when the government set it at $600 and forgot about it. The new $2,000 threshold falls short of what $600 is worth today (over $7,000), but after seven decades without an update, it’s a good starting point.
Here’s what you need to know about the 2026 1099 reporting threshold increase.
| What Changed? |
|---|
| The 1099 reporting threshold for 1099-NEC and 1099-MISC increases from $600 to $2,000 for tax year 2026 under OBBBA, with annual inflation adjustments starting in 2027. |
Who needs to fill out 1099 forms?
When you hire contractors or make certain 1099 payments, you report what you pay them on a 1099 form (e.g., Form 1099-NEC or 1099-MISC) if it’s over the federal reporting threshold.
Use a 1099-NEC form to report payments made to independent contractors. Use a 1099-MISC to report miscellaneous payments such as rents, fishing boat proceeds, medical and health care payments, and crop insurance proceeds.
There are several other types of 1099 forms used for reporting. Another common form is 1099-K, which payment apps and online marketplaces use to report credit card, debit cards, and payment app payments (e.g., Venmo or PayPal).
How did the One Big Beautiful Bill Act change 1099 reporting?
Prior to tax year 2026, the reporting threshold was $600 for Forms 1099-NEC and 1099-MISC. The reporting threshold for tax year 2026 is now $2,000. And beginning in tax year 2027, the threshold will be adjusted annually for inflation.
OBBBA also reverted the Form 1099-K threshold back to $20,000 and 200 transactions (the same threshold in place from 2011 – 2023), retroactive to 2022. The 2021 American Rescue Plan Act had slashed the threshold to $600 with no transaction minimum, and the IRS planned to phase it in gradually: $5,000 for 2024, $2,500 for 2025, and $600 by 2026. OBBBA wiped out that phase-in. Unlike the 1099-NEC and 1099-MISC thresholds, the 1099-K threshold won’t be adjusted for inflation.
| Form | What Does It Report? | Old Threshold Per Payee | New Threshold (Tax Year 2026) Per Payee |
|---|---|---|---|
| 1099-NEC | Contractor payments | $600 (1954 – 2025) | $2,000 |
| 1099-MISC | Miscellaneous payments such as rents, medical and health care payments, and nonqualified deferred compensation | $600 (1954 – 2025) | $2,000 |
| 1099-K | Payments through credit cards, debit cards, or third-party payment networks (e.g., Venmo) | $20,000 + 200 (2011 – 2023); briefly lowered 2024-2025 | $20,000 + 200 transactions (retroactive to 2022) |
What does the $2,000 1099 threshold mean for small businesses?
The threshold increase from $600 to $2,000 for Forms 1099-NEC and 1099-MISC may mean fewer forms to file.
For example, you won’t need to send a 1099-NEC to a contractor you paid $1,500 to in 2026.
So if you work with a handful of contractors or vendors and pay below the new $2,000 threshold, you’ll have less January paperwork, fewer forms to distribute, and fewer chances for filing errors and penalties.
Here are a few important things to keep in mind:
- Timing: The $2,000 threshold applies to payments you make during tax year 2026. The new rule impacts 1099s that you file in early 2027.
- Tracking: Record every payment throughout the year so you know if a contractor or vendor passes the $2,000 threshold.
- Tax liability: The threshold changes your reporting requirement, not the payee’s tax liability. Contractors still owe taxes on all income.
- State 1099 thresholds may differ: Some states have their own 1099 reporting thresholds that may differ from the new federal threshold. Check out Patriot Software’s 1099 state filing requirements for more information.
How does Patriot Software handle 1099 reporting?
You can easily track contractor payments throughout the year with Patriot’s accounting and payroll software.
When it’s time to create 1099 forms, Patriot Software will generate your 1099 based on the information in the software.
You can then download and print 1099s or e-File with Patriot Software (free with Full Service Payroll). And, contractors can access their 1099s in their portal if they consent to digital delivery.
FAQs about the 1099 reporting threshold increase
The 1099 (1099-NEC, 1099-MISC) reporting threshold is $2,000 for tax year 2026, up from $600. The new threshold will be adjusted annually for inflation beginning in tax year 2027.
No, you do not need to send a 1099-NEC to a contractor if you paid less than $2,000 in tax year 2026. For payments made in 2025 and earlier, the $600 threshold still applies.
Yes, you can voluntarily file a 1099 even if you paid the payee below the threshold.
The $2,000 threshold applies to payments you make during tax year 2026. That means the first 1099 forms affected by the new rule are the ones you file in early 2027.
Yes, OBBBA reverted the Form 1099-K threshold back to $20,000 and 200 transactions, retroactive to 2022. This restores the threshold that was in place from 2011 – 2023, before the American Rescue Plan Act lowered it.
No, the $2,000 1099 threshold does not change what contractors owe in taxes. Contractors still owe taxes on all income they earn.
The government hadn’t changed the $600 threshold since 1954, despite annual inflation. The One Big Beautiful Bill Act raised the threshold to $2,000 in 2026 and will adjust annually for inflation beginning in 2027.
