For payments you make in 2026, you only have to issue a Form 1099-NEC or 1099-MISC once you have paid someone $2,000 or more.
The old figure was $600, and it had been $600 for about 70 years.
That sounds like less paperwork, and for most businesses it is. It is also the part everyone has already read. The parts that will actually cost someone money this winter are the thresholds that did not move, the states that did not follow, and an IRS filing system that shuts down on November 19, 2026.
Here is the whole picture, with the dates.
What Changed: The 2026 1099-NEC and 1099-MISC Threshold
Section 70433 of the One Big Beautiful Bill Act raised the information reporting threshold in Internal Revenue Code section 6041 from $600 to a base of $2,000, for payments made after December 31, 2025. The 2026 instructions for Forms 1099-MISC and 1099-NEC confirm it and add that the amount may be adjusted for inflation beginning in calendar year 2027, rounded to the nearest $100.
Two timing points matter more than they sound:
- 2025 payments are still on $600. The forms you issued in January 2026 for last year were correct at the old number, and nothing about this is retroactive.
- 2026 payments are on $2,000, and those are the forms due in early 2027. If your accounting software still has a $600 vendor flag, that is the setting to change.
The IRS published proposed regulations on April 17, 2026 working through the mechanics, with comments closing on June 16. The threshold itself comes from the statute and applies whatever happens to those regulations. What the regulations settle is how you count.
Not sure which vendors need a 1099 this year?
New 1099 Rules for 2026: What Did Not Change
This is where the mistakes will be. Four reporting thresholds stayed exactly where they were, and three of them are lower than $2,000:
The attorney line is the one to watch. Gross proceeds paid to an attorney, such as settlement payments, go in box 10 of Form 1099-MISC and are still reportable at $600. For example, if you pay a law firm $1,400 in legal fees in 2026, no Form 1099-NEC is needed. But if you pay $1,400 of a legal settlement to a claimant's attorney, you still file Form 1099-MISC box 10, because the $600 threshold for gross proceeds did not change.
How You Decide Who Crossed $2,000
You add up payments of the same kind to the same payee across the calendar year. Both halves of that do work.
Same payee is straightforward. Same kind is not. Totals are tested for each payee and for each type of payment on the form, so rent is counted against rent and nonemployee compensation against nonemployee compensation. If you pay the same person for different things, such as rent and consulting, check how each payment is reported before deciding that no form is needed, and get it reviewed where the combined total is well above $2,000.
Backup withholding needs a little more care. Three rules work together, and the first two come from the proposed regulations rather than settled law:
- Once a payee's total for the year reaches $2,000, payments to them are subject to backup withholding if they have not given you a valid TIN. Based on the proposed regulations.
- If you had to file a 1099 for that payee last year, backup withholding applies from the first dollar this year, not from $2,000. Based on the proposed regulations.
- If you did withhold, you file regardless of the amount. The IRS instructions are explicit that backup withholding applies regardless of payment amount, so a $300 payment you withheld 24% from still produces a form.
All three of those depend on having a valid Form W-9 before the first payment, which has not changed and never gets easier to chase afterwards.
Your State Probably Did Not Follow
Most states run their own 1099 filing program with their own threshold, and the federal change does not touch those unless the state adopts it. As things stand for 2026:
- California adopted $2,000 for both 1099-NEC and 1099-MISC from tax year 2026. Confirm on the Franchise Tax Board site before relying on it.
- Mississippi and Wisconsin keep $600, because the figure is written into their statutes and has not been amended.
- Missouri sits at $1,200. Arkansas requires reporting at $2,500 where there is no state income tax withholding.
- States that automatically follow federal law may move to $2,000 as well, but confirm with each state's revenue department, because conformity depends on each state's conformity date.
The practical effect is that a contractor paid $1,300 in 2026 may need no federal form and a state one. If you run payroll or pay vendors across state lines, set your reporting at the lowest threshold that applies to you rather than at $2,000, and filter from there.
One more thing to put on your calendar. The federal figure is indexed from 2027 and most state figures are not, so states that have codified a flat $2,000 will start drifting apart from the federal number again within a couple of years.
The 1099-K Is a Different Rule Entirely
Plenty of people searching for the new threshold are actually thinking about Form 1099-K, which covers card and payment app transactions. That threshold also changed, in the other direction, and it has nothing to do with the $2,000 figure.
The federal 1099-K threshold is back to more than $20,000 and more than 200 transactions, restored retroactively to 2022. Several states did not follow: Maryland, Virginia and Massachusetts require reporting at $600, New Jersey at $1,000, Illinois at four transactions over $1,000, and Arkansas at $2,500.
The point that saves you a correction later: when you pay a contractor by card or through a payment app, the processor reports it on a 1099-K and you do not report it on a 1099-NEC. Paying the same contractor partly by check and partly by card means only the check portion counts toward your $2,000.
The Deadline Nobody Is Talking About
The IRS is switching off the system most businesses have used to file 1099s electronically for decades. FIRE is being retired and IRIS becomes the only electronic filing system for information returns after January 1, 2027, for current year, prior year and corrections alike.
New Applications for a TCC through FIRE are no longer accepted. If you file your own 1099s, you need an IRIS Application for TCC in hand before the 2027 filing season starts, and these are not same-day approvals. If your accountant, payroll provider or bookkeeping service files them for you, ask them now whether they have moved to IRIS.
The electronic filing requirement itself has not changed. Ten or more information returns in total, counting W-2s and every type of 1099 together, and you must file electronically. Four W-2s plus six 1099-NECs already puts you there.
When 2026 Forms Are Due
Three of the normal dates fall on a weekend or holiday in 2027, which moves four rows in that table. January 31, 2027 is a Sunday. February 28 is also a Sunday. And February 15, 2027 is Washington's Birthday, a federal holiday, which pushes the boxes 8 and 10 recipient deadline to Tuesday the 16th. Paper filing is only an option at all if you are under the ten-return threshold.
What Getting It Wrong Costs
The penalty is per form, it scales with how late you are, and it is charged twice: once under section 6721 for the return that went to the IRS, and again under section 6722 for the copy that should have gone to the recipient.
For information returns required to be filed in 2026, the published amounts are $60 a return up to 30 days late, $130 through August 1, $340 after August 1 or not filed at all, and $680 for intentional disregard. Double those if both the IRS copy and the recipient copy are missing. The figures for returns required to be filed in 2027, which is when 2026 forms are due, have not been published yet and will be slightly higher once indexed.
There is an annual maximum, and it is lower for businesses with average annual gross receipts of $5 million or less. For most small businesses the cap is theoretical and the per-form number is what lands.
What to Do Between Now and January
- Apply for an IRIS TCC first, if you file your own returns. It is the only item on this list with a hard external deadline and no workaround.
- Change the vendor threshold in your accounting system to $2,000 for federal reporting, and keep a separate report at $600 so you can see who falls into a state requirement.
- Check the states you actually pay vendors in, rather than only the one you are registered in.
- Chase the missing W-9s now. A vendor who will not give you a TIN means 24% backup withholding, and that is a conversation to have in the autumn rather than in the last week of January.
- Strip out card and payment app transactions before you total each vendor, so you are not duplicating what a 1099-K already covers.
- Review the four unchanged thresholds against your ledger: attorneys, royalties, direct sales, and anything you withheld on.
- Reconcile the vendor ledger to the bank before you run any of it. Thresholds applied to incomplete records produce confident, wrong answers.
If the vendor records are the weak point rather than the rules, that is the fixable part. Our catch-up bookkeeping team rebuilds a year from bank feeds and statements, and the year-end closing checklist covers the rest of the January deadlines that sit alongside this one.
Bottom Line: Fewer Forms, More Ways to Get It Wrong
- $2,000 is the number for 2026 payments, on forms due in early 2027. 2025 payments were on $600.
- Four thresholds did not move: royalties at $10, attorney gross proceeds at $600, direct sales at $5,000, and anything you backup withheld on at any amount.
- Aggregate by payee and by kind. Rent and contract work to the same person are counted separately.
- Check your states. Mississippi and Wisconsin are still $600, Missouri is $1,200, California moved to $2,000.
- FIRE closes on November 19, 2026. If you file your own returns, apply for your IRIS TCC now.
- The 1099-K is a separate rule at more than $20,000 and more than 200 transactions, and card payments do not go on your 1099-NEC.
Orbit Accountants prepares and files 1099s as part of our bookkeeping and payroll work, including the state filings and the W-9 chasing that makes January quiet rather than frantic.
Also read: Year-End Closing Checklist for Small Businesses
Frequently Asked Questions
What is the 1099 threshold for 2026?
$2,000. For payments made in 2026, a Form 1099-NEC or 1099-MISC is required once total payments of the same kind to the same payee reach $2,000, up from $600. The figure is indexed for inflation from 2027 and rounds to the nearest $100. Royalties stay at $10, gross proceeds paid to an attorney stay at $600, and direct sales stay at $5,000.
How much can I pay a contractor without a 1099 in 2026?
Up to $1,999.99 in nonemployee compensation across the whole calendar year, for federal purposes. Two caveats: if you backup withheld on any payment you must file regardless of the amount, and several states have lower thresholds, so a contractor you paid $1,300 may still need a state filing.
Does the $2,000 threshold apply to 2025 payments?
No. The change applies to payments made after December 31, 2025. Forms issued in January 2026 covering 2025 payments were correctly prepared at $600, and there is nothing to amend.
What is the IRS minimum threshold for a 1099?
It depends on the payment. For 2026, nonemployee compensation, rents, prizes, other income, medical and health care payments and crop insurance proceeds are all $2,000. Royalties are $10. Gross proceeds paid to an attorney are $600. Direct sales for resale are $5,000. Anything you backup withheld on is reportable at any amount.
Do I still have to file if my state threshold is lower than $2,000?
Yes, for that state. The federal change does not override a state filing requirement. Mississippi and Wisconsin still use $600, Missouri uses $1,200, and Arkansas uses $2,500 where no state income tax is withheld. California adopted $2,000. The safe approach is to report at the lowest threshold that applies to the states you pay into.
Do you have to file a 1099 if you paid less than $20,000?
The $20,000 figure belongs to Form 1099-K, which payment processors and apps file for card and third-party network transactions, not to the 1099-NEC you issue. The 1099-K threshold is more than $20,000 and more than 200 transactions. Your own obligation to issue a 1099-NEC starts at $2,000 for 2026 payments.
Will the $2,000 threshold go up again?
Yes, by inflation. The amount is adjusted annually beginning in calendar year 2027 and rounded to the nearest $100. Most state thresholds are not indexed, so federal and state figures will diverge again over the next few years.
Can Orbit Accountants handle our 1099 filing for 2026?
Yes. We collect and validate W-9s, total payments by vendor and by payment type, strip out the card and payment app transactions that belong on a 1099-K, and file the federal and state returns as part of our bookkeeping services.
Our vendor records are a mess. Is it too late to fix before January?
No. Fall is the right time. Our catch-up bookkeeping team reconstructs the vendor ledger from bank feeds and statements, which is what makes the threshold test meaningful. Leaving it to the second week of January is what turns a straightforward filing into a scramble.
Legal Disclaimer
This article is for general information only and is not tax, legal or accounting advice. It reflects federal rules as of [publish date]. The federal regulations for the 2026 threshold were still in proposed form when this was written, and state thresholds, filing systems and penalty amounts change. Please speak with a qualified professional about your own filing position. Reading this article does not create a client relationship with Orbit Accountants.
