ARTICLE | November 4, 2026

Last year we looked ahead to a reset of the 1099 rules. That reset is now here. The One Big Beautiful Bill Act (OBBBA) raised the long-standing $600 reporting threshold, restored the old 1099-K rules and tied future thresholds to inflation. Payments your business makes during 2026 are the first to fall under the new rules, and the forms you file in early 2027 will be the first to reflect them.

For most businesses this means fewer forms to prepare and fewer questions from vendors. It does not mean less record-keeping. Here is what changed, when it applies and what to do before year-end.

The $600 threshold is now $2,000

For payments made after December 31, 2025, you generally need to issue a Form 1099-NEC or 1099-MISC only when you pay a vendor $2,000 or more during the calendar year, up from $600. The $600 figure had not changed since the 1950s.

The test is the total paid to each vendor for the year, not the size of any single invoice. A contractor paid $500 a month for six months ($3,000 in total) still needs a 1099-NEC. A one-off $1,500 job does not.

The higher threshold covers nonemployee compensation and most 1099-MISC categories, such as rent, prizes and awards, other income, and medical and health care payments. A few limits stay where they are:

• Gross proceeds paid to attorneys (1099-MISC): still $600.
• Royalties (1099-MISC): still $10.
• Interest and dividends (1099-INT and 1099-DIV): still $10.

Inflation adjustments start in 2027

The $2,000 threshold applies to 2026 payments. Beginning in 2027, it will be adjusted each year for inflation and rounded to the nearest $100. That ends the decades-long problem of a frozen threshold quietly pulling in more and more small payments. It also means the number can change from one year to the next, so confirm the current threshold each January before you run your 1099 reports.

Backup withholding follows the new threshold

Backup withholding, the 24% withholding required when a vendor does not provide a valid taxpayer identification number (TIN), now follows the same $2,000 threshold. The safest practice has not changed: get a completed Form W-9 before you make the first payment, not in January when forms are due.

1099-K: back to $20,000 and 200 transactions

The OBBBA permanently restored the original Form 1099-K rule. A payment app or card processor files a 1099-K only when a payee receives more than $20,000 in gross payments across more than 200 transactions in a year. The IRS has confirmed that this applies retroactively, so the phased reductions toward $600 will not happen.

Reminder for business owners:

• Payments you make by credit card, debit card or a payment app such as PayPal or Venmo are reported by the processor on Form 1099-K. Leave them off your own 1099-NEC so the income is not reported twice.

New boxes on the 2026 forms

The OBBBA also created temporary deductions for qualified tips and qualified overtime pay for tax years 2025 through 2028. To support them, the IRS added new boxes to the 2026 Forms 1099-NEC and 1099-MISC. On the 1099-NEC, non-employee compensation moves from Box 1 to Box 1a, with new boxes for tip information. Most businesses will not use the new boxes. If you pay contractors who work in tipped occupations, such as salons, restaurants or hospitality, talk with us about what you may need to track and report.

The changes at a glance

Key dates for the 2026 filing season

• February 1, 2027: 1099-NEC due to recipients and the IRS. 1099-MISC recipient copies are also due. (January 31 falls on a Sunday.)
• March 1, 2027: 1099-MISC due to the IRS if filed on paper.
• March 31, 2027: 1099-MISC due to the IRS if filed electronically.

If your business files its own 1099s electronically, note that the IRS is retiring its older FIRE filing system. Information returns filed in 2027 are expected to go through the IRS Information Returns Intake System (IRIS) instead. If Larson Gross prepares your 1099s, we handle this for you.

What to do now

1. Update your accounting system. Check the 1099 threshold settings in QuickBooks or your other accounting software so its reports use $2,000 for 2026 payments.
2. Collect W-9s now. Request a W-9 from every new vendor before the first payment and fill in any gaps for existing vendors before year-end.
3. Review how you pay vendors. Separate payments made by check, ACH or wire (which count toward the 1099-NEC) from card and payment-app payments (which do not).
4. Total payments by vendor. Look at full-year totals for each vendor rather than individual invoices.
5. Tell your contractors. Some vendors who received a 1099 in past years will not get one for 2026, and some may ask why. A short note now avoids confusion in January.
6. Check your state. Some states set their own thresholds or require separate filing, so the federal change may not cover every obligation.

The bottom line

The new rules finally bring 1099 reporting in line with how businesses pay people: fewer forms for small payments, a 1099-K rule that ignores casual transactions, and a threshold that will keep pace with inflation. The businesses with the smoothest 2027 filing season will be the ones that update their systems and collect W-9s before December.

If you have questions about how these changes affect your business or would like Larson Gross to prepare your 1099s this year, please contact us below.