A Big Change to 1099 Reporting in 2026

For years, small business owners have followed the same rule:
If you pay an independent contractor $600 or more in a year, you are required, in specific circumstances, to issue a Form 1099-NEC.

But beginning in 2026, that threshold is changing.

The New Rule

Starting with payments made in 2026, a 1099-NEC must be issued when payments to a contractor reach $2,000 for the year in specific circumstances. (This applies to payments made in 2026 and reported in early 2027.) To learn more about when a 1099 is required, please speak with your tax professional.

What This Means for Business Owners

• You can pay contractors a little more before crossing the reporting threshold.

• The old $600 limit will no longer apply for 2026 and will be adjusted for inflation in future years.

• It is still important to collect a W-9 from every contractor before paying them — the threshold changes, but compliance doesn’t.

What Doesn’t Change

1099 reporting is still a January task each year.

Even with the new threshold, businesses should continue to maintain compliance by:

• Collecting W-9s from contractors before issuing payment

• Tracking contractor payments throughout the year

• Prepare and file required 1099 forms by the January deadline

The dollar amount may change, but the annual January reporting requirement does not.

Why This Matters

Even small shifts in reporting rules can affect your year-end workload.
Knowing the new threshold now helps you plan ahead for contractor payments, W-9 collection, and January filing deadlines.

Each week, I share a clear, bite-sized tax insight straight from my continuing education so you can stay informed without sifting through tax changes.

Next week, we share an update about recent changes to 529 Plans.

Thanks for reading,

Brandy Sparkman, EA

I’ll keep learning so you can stay focused on what you do best.

See you next week for another Tax Minute.