1099 Threshold 2026: $2,000 Now, Not $600 (What Changed)

For payments made in 2026, you send a Form 1099-NEC only to a contractor you paid $2,000 or more during the year, not $600. The One Big Beautiful Bill Act raised the threshold for payments made after December 31, 2025, and it may be indexed for inflation starting in 2027. The forms for 2026 are due February 1, 2027, to the IRS and to the contractor. You still need a W-9 from everyone you pay, and the filing itself has moved: the IRS's old FIRE system closes on November 19, 2026, and IRIS, which needs its own filer code, is the only way to e-file this season.

This is the 1099 change most owners will get wrong in January, because the habit of sending a form to everyone over $600 is old. Here is what changed, what did not, and what to do before the end of the year.

What changed for 2026

The law is section 70433 of the One Big Beautiful Bill Act, which amended the information-reporting rules in the tax code. The IRS's 2026 instructions for Forms 1099-MISC and 1099-NEC put the new figures box by box.

Two lines did not move. Gross proceeds paid to an attorney, the box 10 case where you pay a settlement through a lawyer, still starts at $600. Royalties still start at $10.

The threshold is per payee, for the year, by the date you paid. A check written in December 2026 that cleared in January 2027 is a 2026 payment, because you made it when you wrote it.

Who still gets a 1099-NEC

Four tests, in order.

1. Did you pay them for services in the course of your business? A plumber you paid to fix the shop's water heater, yes. A plumber you paid to fix your house, no.
2. Are they a person, a partnership, or an LLC that is not taxed as a corporation? Payments to a corporation are generally exempt. The W-9 is where you find out.
3. Did you pay them by check, ACH, cash, or Zelle? Those count. Credit card, debit card, and PayPal payments do not, because the processor reports them on a 1099-K.
4. Do the countable payments add up to $2,000 or more for 2026? If yes, they get a 1099-NEC.

The corporate exemption has two exceptions you will run into. Payments for legal services and payments for medical or health care services are reportable even when the payee is a corporation. Your attorney's professional corporation gets a 1099-NEC if you paid it $2,000 or more in fees.

Card and PayPal payments

This rule is not new, but the higher threshold makes it matter more. When you pay a contractor by card, or through a third-party network like PayPal, the payment company reports that money on the contractor's Form 1099-K. Those payments "are not subject to reporting on Form 1099-MISC or Form 1099-NEC," in the IRS's words, so they come out of your total.

The 1099-K threshold for payment apps and marketplaces is back to more than $20,000 and more than 200 transactions. The law restored the old rule and cancelled the planned $5,000, $2,500 and $600 steps. Card processors are different: they issue a 1099-K no matter how small the volume.

Zelle is not a card network and does not issue 1099-Ks. A Zelle payment to a contractor counts toward your $2,000 the same as a check.

A shop's January, worked through

Here is a heating and air shop's contractor list for 2026, the way it looks on December 31.

Under the old $600 rule, the office cleaner would have received a 1099-NEC for $1,800 (the card payments came out then too). In 2026 she does not. Rivera Electric crossed the line by $450, which is the case that gets missed: a sub you used on two installs in the spring and one in November.

The free 1099 vendor tracker has these four rows as examples. It splits payments by how you made them and flags who crosses $2,000.

Collect W-9s from everyone anyway

The higher threshold does not change the W-9 rule. Ask for a W-9 before you pay a new vendor, not in January when you need it. You need it for three reasons.

• To know whether they get a form at all. The W-9's tax classification is how you know a payee is a corporation.
• To have the name and taxpayer ID the IRS will match. A form with a wrong TIN is a form you will correct later.
• To avoid backup withholding. If a payee will not give you a TIN, you may have to withhold from payments to them.

On backup withholding, the IRS ties the duty to the same $2,000 line: annual payments under $2,000 are not reportable, so they are not subject to backup withholding. One catch runs the other way. If you did backup withhold from a payee, you must file a 1099-NEC for them regardless of the amount.

The IRS also runs a free TIN Matching program through its e-Services site for payers who file information returns. You can check up to 25 name and TIN pairs at a time and get an answer immediately, which is worth doing for any W-9 that looks hand-copied.

The deadlines for 2026 forms

The usual date is January 31. In 2027 it is a Sunday, so it moves to Monday, February 1. The box 8 and box 10 date is normally February 15, which in 2027 is Washington's Birthday, a federal holiday.

The penalties

For returns due in 2027, Revenue Procedure 2025-32 sets the per-form penalties.

The penalty for filing with the IRS and the penalty for the recipient's copy are separate. Miss six subcontractors' 1099-NECs entirely and the bill can be 6 × $340 for the IRS copies plus 6 × $340 for the recipients' copies: $4,080 for forms that cost nothing to file.

Filing: FIRE is closing, IRIS is the only way

This is the change that will catch people in January, and the reason to act this month.

• FIRE closes on November 19, 2026, at 3 p.m. Eastern. The IRS stopped taking new FIRE filer-code applications in July. From the 2027 filing season, IRIS is the only intake system for information returns.
• IRIS needs its own Transmitter Control Code. A FIRE TCC does not carry over. You apply with your EIN.
• The TCC can take up to 45 days. The IRS's own publications say "up to 45 calendar days" in one place and "45 business days" in another. Either way, apply now, not in January.
• The IRIS Taxpayer Portal is free. You can key forms in by hand or upload them, up to 100 returns at a time.
• You must e-file if you file 10 or more information returns in the year, counting all types together. Ten 1099-NECs and W-2s combined crosses it.

If your CPA or bookkeeper files your 1099s, ask them this week whether they have an IRIS TCC. If you file yourself, start the application today.

What to do before December 31

1. List every vendor you paid in 2026 and how you paid them. Pull checks, ACH, and Zelle from the bank; leave card payments aside.
2. Get the missing W-9s now. December is when vendors still answer email.
3. Total the countable payments per payee and mark who crosses $2,000. Include December checks that clear in January.
4. Decide who files, and make sure that person has an IRIS TCC.
5. Check your state. Some states have their own 1099 rules.

The 1099s are one step in the year-end cleanup. The bookkeeping cleanup checklist covers the rest, and the 2027 tax calendar has every date between now and May.

How Poof handles the 1099s

In Poof, Books → 1099s builds every contractor's year from the payments already in the books, split by how they were paid, against the $2,000 line. Unknown bank payees and checks become "Who is this?" cards, so no contractor payment is missing from the total. W-9s go out by link and come back filled in, with tax IDs stored encrypted. Poof prepares each contractor's copy, emails it to the ones who consented, and gives you a print-and-mail file for the rest, plus a summary for your CPA. Whoever files enters the forms in the IRS's IRIS portal from that summary, with Poof's filer-code checklist beside them, and reminders run from October to December 15 while there is still time to get a TCC.

Related: quarterly estimated taxes and how much to set aside for taxes.

*General information, not tax advice; your CPA has the final word.*

*Written by Austin Semple, a former controller: three years in audit, seven running the books for small businesses, and the founder of Poof. Poof prepares your 1099s from the year's payments, at the $2,000 line, with W-9s collected by link. Start a 30-day trial, no card required.*