1099 threshold for 2026: what moved to $2,000 and what did not
Updated · Rotomal
For tax years beginning after 2025, the threshold for reporting nonemployee compensation on Form 1099-NEC rose from $600 to $2,000, and so did rents, other income, medical and health care payments and crop insurance on Form 1099-MISC. The IRS says the $2,000 amount may be adjusted for inflation from 2027. Royalties ($10), substitute payments ($10) and gross proceeds paid to an attorney ($600) did not change, and the Form 1099-K threshold for payment apps and online marketplaces went back to more than $20,000 and more than 200 transactions.
Thresholds box by box
These are the amounts in the IRS instructions for forms covering 2026 payments, filed in early 2027.
| Form and box | Payment | Threshold for 2026 |
|---|---|---|
| 1099-NEC box 1a | Nonemployee compensation | $2,000 (was $600) |
| 1099-MISC box 1 | Rents | $2,000 (was $600) |
| 1099-MISC box 3 | Other income, including prizes and awards | $2,000 (was $600) |
| 1099-MISC box 6 | Medical and health care payments | $2,000 (was $600) |
| 1099-MISC box 9 | Crop insurance proceeds | $2,000 (was $600) |
| 1099-MISC box 10 | Gross proceeds paid to an attorney | $600 (unchanged) |
| 1099-MISC box 2 | Royalties | $10 (unchanged) |
| 1099-MISC box 8 | Substitute payments in lieu of dividends or interest | $10 (unchanged) |
| 1099-NEC box 2, 1099-MISC box 7 | Direct sales of consumer products for resale (checkbox) | $5,000 (unchanged) |
| 1099-K | Payment-app and online-marketplace payments, reported by the platform; card payments, reported by the processor | Apps and marketplaces: more than $20,000 and more than 200 transactions. Cards: no minimum |
Where the change came from
The One Big Beautiful Bill Act, signed on 4 July 2025, raised the general Section 6041 reporting threshold from $600 to $2,000 for payments made after 31 December 2025. The IRS instructions put it as tax years beginning after 2025, with inflation adjustment possible from calendar year 2027. The same law restored the Form 1099-K thresholds that applied before the American Rescue Plan Act.
1099-K from payment apps is back to $20,000 and 200 transactions
Payment apps and online marketplaces (third party settlement organizations) have to issue Form 1099-K only when payments in the calendar year are more than $20,000 and the number of transactions is more than 200. The IRS says the law retroactively reverted this threshold to the level in place before the American Rescue Plan Act. Card payments are different: the IRS says a card processor issues a 1099-K no matter how many payments there were or how much they were for.
This matters for payers too. Payments you make by credit card, debit card or through a third-party network such as a payment app are reported by the platform on Form 1099-K, not by you on Form 1099-NEC or 1099-MISC. Leave them out of your vendor totals.
Backup withholding moved with it
The IRS instructions apply the $2,000 threshold to backup withholding on the same payments. Backup withholding is 24% and applies when a payee does not give you a TIN, or when the IRS tells you the TIN is incorrect and you have to send a B notice.
The practical rule has not changed: get a W-9 before the first payment, so you never have to withhold from someone who crosses $2,000 late in the year.
What did not change
- Payments to corporations are still generally exempt, except payments for legal services and for medical and health care services.
- Attorneys' gross proceeds are still reported from $600, royalties from $10.
- Form 1099-NEC is still due to the IRS and recipients on 31 January; for 2026 forms that is 1 February 2027, because 31 January 2027 is a Sunday.
- If you file 10 or more information returns in total, you must still e-file, and from 2027 that means IRIS.
How to apply it this season
- Total each vendor's 2026 payments by calendar year, not by invoice.
- Remove card and payment-app payments, which belong on Form 1099-K.
- Check each W-9 for entity type before deciding a vendor is exempt.
- Flag vendors above about $1,500 who have no W-9, so you can collect one before they pass $2,000.
- Keep forms below $2,000 off the federal filing, and check your state's own rules separately.
Payee Ledger does this across every client: running totals from QuickBooks Online or Xero, card and payment-app payments set aside by payment method, W-9 requests with e-signature, and alerts at $1,500 and $2,000 for vendors without a W-9 on file.
Questions
Do I need a 1099-NEC for a contractor I paid $1,500 in 2026?
No federal 1099-NEC is required for nonemployee compensation under $2,000 paid in 2026. The contractor still has to report the income, and you should check your state's rules separately.
Does the $2,000 threshold apply to 2025 payments?
No. It applies to tax years beginning after 2025. Forms for 2025 payments, filed in early 2026, used the $600 threshold.
Will the $2,000 threshold change again?
The IRS says it may be adjusted for inflation beginning in calendar year 2027.
What is the 1099-K reporting threshold for 2026?
For payment apps and online marketplaces, more than $20,000 in payments and more than 200 transactions in the calendar year; the IRS says the law retroactively reverted to the thresholds in place before the American Rescue Plan Act. Card payments have no minimum (IRS, checked 3 November 2026).
Is this tax advice?
No. It summarises the IRS instructions as of 29 October 2026. Whether a payment is reportable, or a vendor exempt, is a question for your tax professional.
Sources
- IRS: Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026) Source: irs.gov
- IRS: FS-2026-07, what gig economy workers should know (Form 1099-K threshold) Source: irs.gov
- IRS: Understanding your Form 1099-K (no minimum for card payments) Source: irs.gov
- IRS: General Instructions for Certain Information Returns (backup withholding, e-file rule, weekend due dates) Source: irs.gov
- Sovos: One Big Beautiful Bill raises 1099 reporting thresholds Source: sovos.com
- IRS: FIRE retirement and the move to IRIS Source: irs.gov