The New 1099 Reporting Threshold for 2026: $600 Becomes $2,000, and Three Numbers That Didn't Move.

A design-build contractor finishes the year with fourteen subcontractors on the ledger and a January ritual: chase the missing W-9s, tally who crossed $600, and file the stack of 1099-NECs. For payments made in 2026, that ritual changes for the first time since 1954. The new 1099 reporting threshold for 2026 is $2,000, not $600. The One Big Beautiful Bill Act more than tripled the number that decides which contractors, landlords, and vendors get a form, and it quietly restored the old 1099-K rules at the same time. What the law did not change matters almost as much as what it did.

The $2,000 threshold applies to the payments most small businesses actually make. Nonemployee compensation on Form 1099-NEC, the subcontractor, the freelance designer, the outside bookkeeper, now requires a form only when payments to that payee total $2,000 or more for the year. The same number governs the core boxes of Form 1099-MISC: rents in box 1, prizes and other income in box 3, medical and health care payments in box 6, and crop insurance proceeds in box 9. The counting rule under IRC §6041 did not change. You aggregate everything paid to a payee in the course of your trade or business across the calendar year and test the total. Payments to corporations generally remain exempt, and anything you pay by credit card or through a payment app's business account stays out of your count entirely, because Treas. Reg. §1.6041-1(a)(1)(iv) hands those transactions to the card processor's Form 1099-K regime instead.

Timing trips people up because the change landed mid-decade. The forms you filed in January 2026 covered 2025 payments, and the old $600 threshold still applied to them. The $2,000 threshold governs payments made during calendar 2026, reported on forms due at the start of 2027, and the IRS has already rewritten the Forms 1099-MISC and 1099-NEC instructions around the new figure. Congress also built in drift: new §6041(h) indexes the threshold for inflation starting with 2027 payments, so the number creeps upward in $100 steps instead of sitting frozen for another seventy years. Backup withholding moves in lockstep. A conforming change to §3406(b)(6) means the obligation to withhold 24% from a payee who never furnished a taxpayer identification number now attaches at the same $2,000 line.

Royalties still generate a Form 1099-MISC at just $10, because that threshold lives in §6050N, which the OBBBA did not touch. Gross proceeds paid to an attorney, the box 10 settlement payments, still trigger reporting at $600 under §6045(f), although ordinary legal fees for services follow the new $2,000 rule on Form 1099-NEC. And nothing about deductibility changed. A $1,500 payment to a subcontractor is exactly as deductible in 2026 as it was in 2025; the form disappears, the business expense does not. The mirror image is also true: the contractor who receives $1,500 and no form still owes income tax and self-employment tax on every dollar. The threshold decides paperwork, not taxability.

The same law ended the 1099-K saga. The American Rescue Plan had scheduled the third-party settlement threshold to fall to $600, and the IRS spent three years phasing it in, $5,000 for 2024 with $2,500 planned for 2025. The OBBBA repealed the change retroactively, as if it had never been enacted, and the IRS confirmed in updated FAQs that platforms like PayPal, Venmo, and Stripe report a payee only when gross payments exceed $20,000 and transactions exceed 200 for the year. A handful of states kept their own lower 1099-K thresholds, so a form can still show up in the mail below those numbers, but the federal cliff at $600 is gone.

The temptation is to stop collecting W-9s from small vendors, and that is the mistake I expect to see most. You do not know in March which handyman will cross $2,000 by November, and a W-9 is easy to get before the first check and nearly impossible to get in January from a vendor you no longer use. Collect one from every unincorporated vendor at onboarding, threshold or no threshold. Backup withholding is what gives the form teeth: once a payee crosses the reportable line without furnishing a TIN, §3406 makes you liable for the 24% you failed to withhold, out of your own pocket if the money is already gone.

Keep the change in context. Section 70433 is one of the smaller pieces of a law that rewrote a lot of small-business tax at once, and the pieces with hard deadlines deserve the attention first. If your business capitalized research costs from 2022 through 2024, the Section 174 refund election had a clock on it, and if you run large pass-through losses, the tightened excess business loss cap changes the planning math for 2026. The 1099 change, by contrast, mostly asks you to resist doing less than you should.