Filing tax forms may not be the highlight of anyone’s year—but staying ahead of IRS changes can help your business save time, reduce compliance headaches, and avoid
unnecessary penalties.
New 1099-NEC Threshold for Independent Contractors
If your business pays independent contractors for services, you’re required to file IRS Form 1099-NEC when total payments exceed a certain amount in a calendar year. For decades, that threshold has been $600—a figure familiar to business owners and accountants alike.
Beginning with payments made in 2026, that amount is set to increase. Thanks to the newly enacted One Big Beautiful Bill Act (OBBBA), you’ll only need to file a 1099-
NEC if you pay an independent contractor $2,000 or more during the year. Starting in 2027, this threshold will be adjusted annually for inflation in $100 increments. This is great news for many small and mid-sized businesses—fewer 1099s to prepare, mail, and track each January.
Updates to 1099-K Filing Rules
The OBBBA also brings significant updates to Form 1099-K, which is used by third-party settlement organizations (TPSOs)—companies like PayPal, Venmo, Uber, and
eBay—to report payments made through their platforms. Under prior law, the 1099-K filing threshold was set to drop dramatically in coming years—from $20,000 and 200 transactions down to just $600—potentially creating a flood of new reporting obligations for platforms and taxpayers alike. The OBBBA reverses those planned reductions. Effective retroactively to 2022, TPSOs are only required to file a Form 1099-K when both of the following apply:
The recipient is paid more than $20,000, and
The recipient has more than 200 transactions during the year.
This rollback means both platforms and users can expect far fewer Forms 1099-K—and less confusion for taxpayers receiving small amounts through digital platforms.
A Final Word of Caution
Even with these relaxed reporting thresholds, remember: all income is taxable, whether or not it’s reported on a 1099 form. Businesses and individuals alike must continue to report all taxable income on their federal tax returns.
Need help preparing for the 2026 reporting changes?
Our team of CPAs can help you review your contractor payments, ensure compliance with IRS requirements, and plan ahead for a smoother tax season. Contact us today to discuss how these updates may affect your business.
