Good news for business owners: beginning with payments made in 2026, the federal reporting threshold for certain Forms 1099 increases from $600 to $2,000. This change applies to independent contractor payments reported on Form 1099-NEC and many payments reported on Form 1099-MISC, including rents. The new threshold applies to the total paid to each recipient during the calendar year, rather than each individual payment. For example, a business that pays an independent contractor $1,500 during 2026 generally will not need to issue a
Form 1099-NEC, assuming no special reporting requirement applies.
The higher threshold will first affect 2026 forms generally filed in early 2027, and inflation adjustments begin in 2027. However, this is not a blanket increase for every type of 1099 payment, so some reporting thresholds remain unchanged. The change also does not make payments below $2,000 tax-free; recipients must still report taxable income even if they do not receive a Form 1099.
Businesses should continue collecting Forms W-9 from contractors and maintaining accurate payment records throughout the year. As year-end approaches, review your vendor totals and accounting software settings to prepare for the updated requirements.
Please contact us if you would like help determining which payments require a 1099.
Sincerely,
Epperson CPA, PLLC