1099 Threshold 2026: The New $2,000 Rule and What to Do Now

1099 Threshold 2026: The Short Answer

The 1099 threshold for 2026 is $2,000. If your business pays a contractor, landlord, or other vendor $2,000 or more during 2026, you generally file Form 1099-NEC or Form 1099-MISC for them in early 2027.

That's up from $600, and it goes by the year you made the payments, so the 1099s you sent in early 2026 for 2025 payments still used $600. The W-9, the corporation and credit card exceptions, and the contractor's tax bill all stayed the same. Pennsylvania still wants its own copy.

We checked everything below against the law, the IRS form instructions, and the Pennsylvania Department of Revenue on October 12, 2026. This is general information, so confirm your own situation with your CPA before you file or skip a form.

What Changed, and Which Forms Does It Cover?

The change is in section 70433 of the One Big Beautiful Bill Act, signed July 4, 2025. The law raised the reporting floor from $600 to $2,000 for payments made after December 31, 2025. It's one piece of a much bigger bill, and we covered the rest in our rundown of the OBBBA tax changes.

The new 1099 threshold doesn't reach every box on the forms. Here's how the IRS instructions for Forms 1099-MISC and 1099-NEC read for 2026 payments.

Federal reporting thresholds per payee, per calendar year, from the current IRS instructions (the IRS labels this revision 12/2026).

What you paid for	Paid before 2026	Paid in 2026	Form
Services from someone who isn't your employee (parts and materials count)	$600	$2,000	1099-NEC
Attorney fees	$600	$2,000	1099-NEC
Rent, prizes and awards, other income, medical and health care payments	$600	$2,000	1099-MISC
Gross proceeds paid to an attorney, like a settlement	$600	$600, no change	1099-MISC
Royalties	$10	$10, no change	1099-MISC

There's two details people miss. The $2,000 is a yearly total per vendor, and it includes parts and materials billed with the labor. And the number isn't locked in. Starting with 2027 payments it's adjusted for inflation every year, and the IRS hadn't posted the 2027 figure when we checked.

When Are 2026 1099s Due?

January 31, 2027 is a Sunday. The IRS weekend rule pushes a due date to the next business day. So Form 1099-NEC is due to the contractor and to the IRS by Monday, February 1, 2027. Recipient copies of Form 1099-MISC are generally due that same day.

The IRS copy of a 1099-MISC gets more time. It's due March 1, 2027 on paper (February 28 is a Sunday too) or March 31, 2027 if you e-file. If you file 10 or more information returns of any type, the IRS says you have to e-file. Whoever handles your 1099 prep will want the vendor list well before then.

Who Still Doesn't Get a 1099, No Matter the Amount?

The exceptions didn't move. Under those same instructions, you generally don't send a 1099-NEC or 1099-MISC for these.

• Payments to corporations. That includes an LLC taxed as a C or S corporation. The usual exceptions still apply. Attorney fees and medical or health care payments get reported even when the payee is incorporated.
• Payments by credit card, debit card, or a third-party payment network. The processor reports those on Form 1099-K. They stay off your form, even past $2,000.
• Merchandise, freight, and storage. The forms cover services and the payment types in the table above.

The current 1099-K threshold depends on who's doing the reporting. Card processors report every payment, with no minimum. Payment apps and online marketplaces only have to report once a payee's payments top $20,000 across more than 200 transactions in a year. So under the federal rules, a contractor you paid $6,000 through an app might not get a form from anybody.

A Hypothetical: Three Vendors, One Form

This example is made up to show how the rules stack. Say you run a 6-person remodeling company in Cranberry Township and you paid these three vendors in 2026.

• A painter, sole proprietor, $1,850 by check. No form. He's under $2,000. Under the old $600 rule he would've gotten one.
• A tile installer, single-member LLC that isn't taxed as a corporation, $14,300. You paid $11,000 by check and $3,300 on the company card. He gets a 1099-NEC for $11,000, materials included. The card payments are the processor's to report.
• An electrician, S corporation, $9,600 by check. No form, because it's a corporation.

Three vendors, $25,750 paid, one form. But you only know that if you've got a W-9 from each of them. Without it you can't tell the LLC from the S corporation.

What Didn't Change?

The headlines about the new 1099 threshold make it sound like you can stop tracking anybody under $2,000. You can't. If all your bookkeeper or tax preparer has told you is "it's $2,000 now," ask about these three things.

You still need a W-9 from every vendor

In January you don't know who's going to cross $2,000 by December, or who's incorporated. The IRS says to use Form W-9 to request a vendor's taxpayer ID number, and line 3a of the form shows how they're taxed. Get it before you cut the first check.

Backup withholding is still 24%

If a vendor won't give you a taxpayer ID number, you can be required to hold back 24% of what you pay them and send it to the IRS. IRS Publication 1099 says the dollar trigger for that went up to $2,000 as well.

There's a catch in the rules, though. If you had to file a 1099-NEC or 1099-MISC for a vendor's 2025 payments, that vendor gets no $2,000 cushion in 2026. If they still haven't given you a taxpayer ID number, the 24% can apply from the first dollar.

The income is still taxable

The threshold only decides who gets a form. The IRS instructions say payments can skip the 1099 "although they may be taxable to the recipient." A self-employed person has to file a return once net self-employment earnings reach $400, form or no form. On your side, every payment still belongs in your books.

Does Pennsylvania Have Its Own 1099 Filing Rule?

Yes, Pennsylvania wants its own copy. The rule is in the Department of Revenue's Personal Income Tax Bulletin 2023-01. If you have to file a federal 1099-NEC or 1099-MISC for Pennsylvania-source income, the state gets a copy by January 31 (Monday, February 1 in 2027). That's true whether or not you withheld any Pennsylvania tax, and filing with the IRS doesn't cover it.

The bulletin ties the state filing to the federal one, and it doesn't set a separate Pennsylvania dollar amount. But as of October 12, 2026, the Department of Revenue hadn't published guidance on the new 1099 threshold. Its help page on the minimum amount, last updated August 28, 2026, still says $600.

Read literally, a vendor under $2,000 wouldn't need a state copy either. The Department hasn't said that yet, so check its page again before you file.

One more state rule matters if you're a Pittsburgh-area owner who uses out-of-state subs. Pay a nonresident individual $5,000 or more in a year for work done in Pennsylvania and you're required to withhold 3.07% state income tax. Under $5,000 it's optional.

What Should You Do Before December 31?

None of this takes long if you start in the fall.

1. Run a vendor payments report for January 1 through today. If the books are reconciled every month, it's a quick one.
2. Sort it by total. Everybody at $2,000 or more goes on the list.
3. Flag anyone close. A vendor sitting at $1,700 in October is one invoice away.
4. Check the entity type on each W-9. Corporations come off the list, except law firms and medical providers.
5. Collect the missing W-9s now. It's a lot easier to get one while you still owe somebody a check.
6. Separate card and app payments from checks, cash, and ACH. Only the checks, cash, and ACH go on your forms. Not every app counts, so if you paid a vendor through one, check that it sends 1099-Ks before you leave them off.
7. Pull the 1099 list you filed for 2025 payments. Those are the vendors where a missing taxpayer ID number can mean backup withholding from the first dollar.
8. Note any out-of-state vendor near $5,000 for the Pennsylvania withholding rule.
9. Sort out how you'll e-file. The IRS's own system needs a Transmitter Control Code, and the IRS says the application can take up to 45 days. Apply by mid-November to be safe. Ask your software or preparer whether you need your own.

Do this in October and January's kinda boring. Wait, and you're chasing W-9s from people who've already been paid.

If your vendor records are a mess, that's fixable. It's the kind of catch-up bookkeeping we do at Peacock Bookkeeping Services in Cranberry Township, and you can reach us at (412) 407-7420.