IRS Raises 1099 Reporting Threshold to $2,000 Starting January 1, 2026

Big news for businesses and independent contractors!

Beginning January 1, 2026, the IRS is increasing the reporting threshold for Form 1099-NEC and Form 1099-MISC from $600 to $2,000 per calendar year.

What Does This Mean?

Previously, businesses were required to issue a 1099 form to any non-employee who received $600 or more in payments during the year. Starting in 2026, that threshold jumps to $2,000, reducing the administrative burden for many small businesses and freelancers.

Key Details:

• Effective Date: Payments made on or after January 1, 2026.

• Forms Impacted: 1099-NEC (Nonemployee Compensation) and 1099-MISC.

• Threshold Change: From $600 → $2,000.

• Inflation Adjustment: Beginning in 2027, the threshold will be adjusted annually for inflation.

  
  

Why the Change?

The IRS aims to modernize reporting requirements and ease compliance for businesses, while still ensuring accurate income reporting. This update reflects inflation and reduces paperwork for smaller transactions.

What Should You Do Now?

• Update Accounting Systems: Ensure your software and processes reflect the new threshold.

• Review Vendor Agreements: Communicate changes to contractors and vendors.

• Maintain Accurate Records: Even if a 1099 isn’t required, income is still taxable.

Bottom Line

This change simplifies compliance for businesses and freelancers, but proper record-keeping remains essential. Start preparing now to avoid surprises in 2026!