The 1099-NEC threshold is $2,000 for payments made in 2026

What changed for 1099s in 2026

The One Big Beautiful Bill Act (P.L. 119-21, which the IRS also calls the Working Families Tax Cuts) raised the reporting threshold in section 6041 of the tax code from $600 to $2,000 for payments made after Dec 31, 2025. The IRS puts it plainly: "For payments made in 2026, the reporting threshold is $2,000."

The 1099-NEC rule for services and the backup withholding rule both point back to that section 6041 amount, so they moved with it. You report 2026 payments in early 2027 on the December 2026 revision of Forms 1099-NEC and 1099-MISC.

Nothing changed about what is taxable. A contractor you paid $1,500 still owes tax on it. You just do not send them a form.

Who gets a 1099-NEC for 2026

You file a 1099-NEC for a payee when all four of these are true:

1. You paid someone who is not your employee.
2. You paid for services in the course of your trade or business.
3. You paid an individual, a partnership, an estate or, in some cases, a corporation.
4. Your payments to that payee were at least $2,000 for the year.

"At least" matters: a contractor paid exactly $2,000 gets a form. Personal payments never count. The plumber who fixed the sink in your home is not a business payment.

Which payments count toward the $2,000

• Services, including parts and materials. If a repair shop bills you $1,700 of labor and $400 of parts for the job, the whole $2,100 counts.
• Not goods. Payments for merchandise, freight, storage and similar items are not reportable. Lumber from a supplier is not a 1099 payment.
• Not card or app payments. Payments made by credit card, debit card or through a third party payment network are reported by the payment company on Form 1099-K. Leave them out of your 1099-NEC totals. Our Form 1099-K guide covers the other side.
• Not most corporations. Payments to a corporation, including an LLC taxed as a C or S corporation, generally need no 1099-NEC. Lawyers are the exception: fees paid to a law firm need a form even when it is incorporated.

An LLC taxed as a partnership still gets a 1099-NEC, and so does a single-member LLC owned by a person. The contractor's Form W-9 tells you which one you are paying: line 3a asks for its federal tax classification.

What stayed at $600, and the 1099-MISC amounts

The attorney lines trip people up. A law firm's fee for drafting your lease goes in box 1a of the 1099-NEC, from $2,000. Settlement money you pay to a claimant's attorney goes in box 10 of the 1099-MISC, and that still starts at $600.

Both forms also gained boxes for 2026: cash tips, tipped occupation codes and qualified overtime (1099-NEC boxes 1b, 1c and 1d). Most businesses paying ordinary contractors leave them blank.

Backup withholding and W-9s

If a contractor will not give you a taxpayer identification number, you must withhold 24% of reportable payments and send it to the IRS. That duty uses the same $2,000 test. It starts once your payments to that payee reach $2,000 for the year, or from the first payment if you were required to file a 1099 for them for the year before. If you withhold anything, you file a 1099-NEC for that person, whatever the amount.

The fix is the W-9. Ask for one before the first payment, not in January. It gives you the legal name, the TIN and the tax classification on one page.

A worked example: two contractors either side of $2,000

Say a landscaping company paid two contractors in 2026:

• A tree crew run through a single-member LLC: three jobs, $2,150, all by check.
• An irrigation repair business owned by one person: $1,450 by bank transfer, plus $800 on the company credit card.

The irrigation business was paid $2,250 in total, but $800 went through a card. Take it out: $2,250 minus $800 is $1,450, under $2,000, so no 1099-NEC. Under the old $600 rule, that same $1,450 would have needed one.

The tree crew's form carries the owner's name on the first name line, the LLC's name on the second, and the owner's TIN from the W-9. Had the W-9 said the LLC is taxed as an S corporation, it would need no form at all.

When 2026 1099s are due

The 1099-NEC is due January 31, but Jan 31, 2027 is a Sunday, and the instructions move a weekend or legal holiday due date to the next business day. February 28, 2027 is a Sunday too, which moves the paper 1099-MISC to March 1. A 1099-MISC reporting gross proceeds paid to an attorney (box 10) is due to the recipient February 15, which in 2027 is Washington's Birthday, a federal holiday, so it moves to February 16.

If you file 10 or more information returns in total, W-2s included, you must e-file. The IRS's FIRE system closes on Nov 19, 2026, so 2026 forms go through IRIS. Our IRIS guide covers the setup, and it takes weeks.

Late or wrong forms due in 2027 cost $60 each if corrected within 30 days, $130 if corrected by August 1 and $340 after that (Rev. Proc. 2025-32). A separate penalty of the same size applies to the copy you owe the contractor.

The threshold rises with inflation from 2027

The law adjusts the $2,000 for each calendar year after 2026 by the cost of living, rounded to the nearest $100. Payments made in 2027 will use that new figure. The IRS had not published it as of Oct 18, 2026. Check it before you total 2027 payments.

The mistakes bookkeepers fix every January

• Counting card payments. The contractor gets a 1099-K from the card company and a 1099-NEC from you for the same money, and their income looks doubled. Take card and app payments out first.
• Treating every LLC as a corporation. Only an LLC taxed as a C or S corporation is exempt. Read line 3a of the W-9.
• Filing at $600 out of habit. For 2026 payments, a 1099-NEC under $2,000 is not required unless you backup withheld.
• Forgetting the attorney rules. Settlement proceeds paid to an attorney still start at $600, and law firms get forms even when incorporated.
• Chasing W-9s in late January. A contractor who has moved on answers slowly, and you need the TIN to file.

What to do before January, in order

1. List everyone you paid in 2026 for services, rent or legal work by check, cash or bank transfer.
2. Request a Form W-9 from anyone on that list likely to reach $2,000 by Dec 31, and from any attorney.
3. Total each payee's 2026 payments with card and app payments taken out, and compare them to the table above.
4. Check each W-9's tax classification so corporations (other than law firms) come off the list.
5. Count every information return, W-2s included, to see whether you must e-file, and set up IRIS now if you do.
6. Send recipient copies and file with the IRS by Feb 1, 2027.

If your books are in BooksGPT, the 1099 worksheet does step 3 from your categorized books: it adds up what you paid each contractor, takes out card payments, applies the $2,000 threshold for 2026 and exports Excel or CSV for you or your CPA. It does not file the forms. Set up your contractors first so the totals are right.