For payments you make in 2026, the Form 1099-NEC reporting threshold is $2,000, up from $600. If you pay a contractor $2,000 or more for services during calendar year 2026, you file a 1099-NEC in early 2027. If you pay less, you generally don't. The IRS states it directly: "For payments made in 2026, the reporting threshold is $2,000" (IRS: Am I required to file a Form 1099).
The catch is timing. The forms you file in early 2026 cover payments made in 2025, and those still use the old $600 threshold. The new number only applies to payments made from January 1, 2026 onward. Several Form 1099-MISC boxes also kept their own thresholds, so not everything moved to $2,000.
Key Takeaways
- The 1099-NEC threshold and many 1099-MISC thresholds rise from $600 to $2,000 for payments made in 2026. Payments made in 2025 still use $600.
- Some amounts did not change: attorney gross proceeds and fish purchased for resale stay at $600, royalties and substitute payments stay at $10, and direct sales stay at $5,000.
- Card, PayPal, and payment app transactions go on Form 1099-K, not 1099-NEC, so don't double-report them.
- Tax-year-2026 Forms 1099-NEC are due to the IRS and to recipients on Monday, February 1, 2027.
- IRIS is the only IRS e-filing system for the 2027 filing season, and e-filing is required once you file 10 or more information returns in total.
What changed in 2026, and why?
The change comes from the One Big Beautiful Bill Act (Public Law 119-21), section 70433. It amended Internal Revenue Code section 6041(a), raising the general information reporting threshold from $600 to $2,000 for payments made after December 31, 2025. Section 6041A(a), which covers certain payments for services, follows the same change. The $5,000 direct sales threshold did not change.
The law also added an inflation adjustment in section 6041(h). It applies to calendar years after 2026, so 2027 will be the first adjusted year. The IRS has not yet published the 2027 amount. For payments made after 2026, the IRS says to check Publication 1099 for the inflation-adjusted threshold.
Here is how the threshold lines up by year:
| Payments made in | Reporting threshold | Forms filed in |
|---|---|---|
| 2025 | $600 | Early 2026 |
| 2026 | $2,000 | Early 2027 |
| 2027 and later | Inflation-adjusted (not yet published) | Early 2028 and later |
Which payments use $2,000, and which keep other thresholds?
Most service and rent payments now use $2,000, but several 1099-MISC boxes keep their own amounts. The table below comes from the final Instructions for Forms 1099-MISC and 1099-NEC (Rev. 12/2026).
| Form and box | Payment type | 2026 threshold |
|---|---|---|
| 1099-NEC, box 1a | Nonemployee compensation (contractor services, attorney fees) | $2,000 |
| 1099-MISC, box 1 | Rents | $2,000 |
| 1099-MISC, box 2 | Royalties | $10 |
| 1099-MISC, box 3 | Other income | $2,000 |
| 1099-MISC, box 5 | Fishing boat proceeds | No minimum |
| 1099-MISC, box 6 | Medical and health care payments | $2,000 |
| 1099-MISC, box 7 | Direct sales of consumer products for resale | $5,000 |
| 1099-MISC, box 8 | Substitute payments in lieu of dividends or interest | $10 |
| 1099-MISC, box 9 | Crop insurance proceeds | $2,000 |
| 1099-MISC, box 10 | Gross proceeds paid to an attorney | $600 |
| 1099-MISC, box 11 | Fish purchased for resale | $600 |
| 1099-MISC, boxes 12 and 15 | Section 409A deferrals and nonqualified deferred compensation | $2,000 |
Attorney fees vs. attorney gross proceeds
Payments to lawyers are where the two thresholds are easiest to mix up.
Attorney fees are what you pay a lawyer for legal services they perform for your business. Those go on Form 1099-NEC, box 1a, and use the $2,000 threshold.
Gross proceeds paid to an attorney are different. These are payments made to an attorney in connection with legal services but not for the attorney's own services, for example a settlement paid through the claimant's attorney, as the IRS instructions explain. Those go on Form 1099-MISC, box 10, and still use the $600 threshold.
One more rule applies to both. The usual exemption for payments to corporations does not apply to legal services or to medical and health care payments. If you pay a law firm or a medical practice that is incorporated, you still report it when you meet the threshold.
Who doesn't get a 1099?
Raising the threshold removes many small vendors from your list, but some payees were never on it. Per the IRS instructions, you generally don't file a 1099-NEC or 1099-MISC for:
- Corporations. Payments to corporations are generally exempt. The exceptions are legal services and medical and health care payments, covered above.
- Card and payment app payments. If you paid by credit card, debit card, or a third-party network such as PayPal, the payment processor reports it on Form 1099-K. The 1099-K threshold is more than $20,000 and more than 200 transactions (OBBBA section 70432).
- Employees. Wages go on Form W-2, not a 1099.
- Merchandise, freight, storage, and telephone. Payments for goods and for these services are not reportable on these forms.
If your books mix card payments and check or ACH payments to the same contractor, separate them. Only the non-card portion counts toward the $2,000.
What new boxes are on the 2026 forms?
The 2026 forms add boxes tied to the new tips and overtime provisions in P.L. 119-21 (sections 70201 and 70202). On Form 1099-NEC:
- Box 1b: cash tips
- Box 1c: Treasury Tipped Occupation Code (TTOC)
- Box 1d: overtime
Form 1099-MISC adds new boxes 13a, 13b, and 14 under the same provisions. Also, excess golden parachute payments now go on Form 1099-NEC, box 3.
Most small businesses paying freelancers won't use these boxes. If you pay tipped workers or overtime to people who receive a 1099, check the box-by-box instructions before year-end so your records capture those amounts separately.
How do backup withholding and Form W-9 fit in?
Backup withholding is 24% of the payment. You withhold it when a payee doesn't give you a correct taxpayer identification number (TIN). Under IRC section 3406, the backup withholding threshold follows the same $2,000 change (IRS backup withholding page).
There is one important exception to the $2,000 rule. If you backup-withheld any amount from a payee, you must file a 1099-NEC for that payee regardless of the amount paid.
The best way to avoid backup withholding is to collect a Form W-9 before you pay anyone. The current version is Rev. March 2024. After you have the W-9, you can check the name and TIN combination with the IRS TIN Matching program. Catching a mismatch in the fall is much easier than chasing a contractor in late January.
When are tax-year-2026 1099s due in 2027?
The main date is Monday, February 1, 2027. That is when Form 1099-NEC is due to both the IRS and recipients. The other dates depend on the form, the box, and how you file.
| Form | Due to | Due date |
|---|---|---|
| 1099-NEC | IRS (paper or e-file) and recipients | Mon, Feb 1, 2027 |
| 1099-MISC (most boxes) | Recipients | Mon, Feb 1, 2027 |
| 1099-MISC (box 8 or 10 reported) | Recipients | Tue, Feb 16, 2027 |
| 1099-MISC | IRS, paper filing | Mon, Mar 1, 2027 |
| 1099-MISC | IRS, e-filing | Wed, Mar 31, 2027 |
These dates follow the weekend and holiday rule in the IRS instructions and Publication 1099. When a due date falls on a Saturday, Sunday, or legal holiday, it moves to the next business day. In 2027, January 31 is a Sunday, so the 1099-NEC date moves to Monday, February 1. February 15 is Presidents' Day, so the box 8 and box 10 recipient date moves to Tuesday, February 16.
For the full list of payroll, income tax, and estimated tax dates, see our 2027 small business tax deadline calendar.
How do you file 1099s in 2027?
You must e-file if you file 10 or more information returns in total during the year. That count includes Forms W-2, not just 1099s (General Instructions for Certain Information Returns). A business with six employees and four contractors already hits the 10-return mark.
For e-filing, the IRS uses the Information Returns Intake System (IRIS). IRIS has a free web portal where you can enter forms directly. The older FIRE system has been retired, and IRIS is the only IRS intake system for the 2027 filing season (IRS: E-file information returns with IRIS). If you used FIRE in past years, set up IRIS access before January.
What are the penalties for late or missing 1099s?
Penalties apply per return, and they grow the longer you wait. These amounts apply to returns required to be filed in 2027, from Rev. Proc. 2025-32 (Internal Revenue Bulletin 2025-45).
| When you file correctly | Penalty per return | Maximum for small businesses |
|---|---|---|
| Within 30 days of the due date | $60 | $244,500 |
| More than 30 days late, by August 1 | $130 | $698,500 |
| After August 1, or not filed | $340 | $1,397,000 |
| Intentional disregard | Greater of $690 or 10% | No maximum |
A "small business" for these maximums is one with gross receipts of $5 million or less. The IRS information return penalties page explains how the penalties are applied.
What should New Jersey businesses know?
New Jersey adds a few rules of its own on top of the federal ones:
- E-filing is mandatory for all 1099s. New Jersey requires electronic filing of Forms W-2 and all Forms 1099 (NJ Division of Taxation e-file mandate).
- The NJ file format is not the IRS format. New Jersey's 1099-NEC electronic file layout differs from the IRS file, including the positions for state withholding fields (NJ software developer specifications). Software that exports a federal file may not produce a valid NJ file without changes.
- Combined Federal/State Filing. New Jersey's payroll filing page lists the 1099 under the Combined Federal/State Filing program (NJ payroll filing information).
We have not been able to confirm whether New Jersey has adopted the federal $2,000 threshold for its own 1099 reporting. Confirm New Jersey's reporting threshold directly with the NJ Division of Taxation before you decide which contractors to leave off your state filing.
A year-end 1099 checklist for 2026
Use the last quarter of the year to get ahead of February 1 (for the rest of your year-end tax moves, see our year-end tax planning checklist for 2026):
- Review 2026 vendor payments. Run a report of everyone you paid this year and total each payee. Flag anyone at or near $2,000 for services or rent.
- Separate card and app payments. Remove amounts paid by credit card, debit card, PayPal, or other payment apps. Those are reported on Form 1099-K.
- Collect W-9s now. Request a current Form W-9 from every flagged payee and run the names and TINs through IRS TIN Matching.
- Flag attorneys and medical providers. Report legal fees and medical payments even if the payee is a corporation. Check whether any attorney payments are gross proceeds at the $600 threshold.
- Set up IRIS. Create your IRIS access early, since FIRE is gone. New Jersey filers should also confirm their state e-filing method.
- Track tips and overtime if they apply. If you pay cash tips or overtime to 1099 workers, record them separately for the new boxes.
- Calendar February 1, 2027. Set reminders for February 1 (1099-NEC to the IRS and recipients; most 1099-MISC recipient copies), February 16, March 1, and March 31.
This is much easier when contractor payments are coded correctly as you go. A monthly bookkeeping checklist that includes reviewing contractor payments keeps the year-end total accurate. If your 2026 books are already behind, start with our guide on how to catch up on bookkeeping before you pull 1099 totals.
How Asquaire can help
We keep contractor payments and W-9s organized in your books as part of our tax preparation services and monthly bookkeeping services. Tax preparation starts at $199 per individual return and $650 per business return, and bookkeeping starts at $249 per month. Asquaire Financials is not a CPA firm. Our founders are ACCA-qualified accountants with Big Four experience.
Frequently asked questions
Do I need to send a 1099 if I paid a contractor $1,500 in 2026?
Generally, no. For payments made in 2026, the 1099-NEC threshold is $2,000 per payee for the year. A total of $1,500 falls below it. The exception is backup withholding: if you withheld any amount from that contractor, you must file a 1099-NEC regardless of the amount.
Is the 1099 threshold $600 or $2,000?
Both, depending on the year of payment. Payments made in 2025, reported in early 2026, use $600. Payments made in 2026, reported in early 2027, use $2,000. Starting in 2027, the amount will be adjusted for inflation. Some 1099-MISC boxes, such as attorney gross proceeds ($600) and royalties ($10), keep their own thresholds.
Do I send a 1099 to an LLC?
It depends on how the LLC is taxed, which the LLC reports on its Form W-9. Payments to corporations are generally exempt, so an LLC that is taxed as a corporation usually doesn't get one. An LLC that isn't taxed as a corporation usually does get a 1099 when you meet the threshold. Legal and medical payments are reported even when the payee is a corporation.
Do I send a 1099 if I paid by PayPal or credit card?
No. Payments made by credit card, debit card, or a third-party payment network are reported by the processor on Form 1099-K, not by you on a 1099-NEC or 1099-MISC. The 1099-K applies when payments total more than $20,000 across more than 200 transactions.
When is the 1099-NEC due in 2027?
Form 1099-NEC for tax year 2026 is due to both the IRS and recipients on Monday, February 1, 2027. The usual January 31 date falls on a Sunday in 2027, so it moves to the next business day.
The bottom line
For 2026 payments, most contractor 1099s start at $2,000, but royalties, attorney gross proceeds and direct sales kept their own thresholds, and card payments still belong on the 1099-K. Pull your 2026 vendor totals and collect W-9s now so February 1, 2027 is routine.
If you'd like help sorting your contractor payments and filing your 1099s, contact us to talk through your situation.
This article is general information, not tax advice for your situation.
