For 2026 payments, one of the most important information-reporting changes is the increase in the federal reporting threshold for many payments reported on Form 1099-NEC and Form 1099-MISC.
The old $600 threshold has increased to $2,000 for certain payments made after December 31, 2025. The $2,000 amount applies for calendar year 2026 and is scheduled to be adjusted for inflation after 2026.
For tax preparers, the key point is that this is not a blanket $2,000 threshold for every Form 1099. Different forms and payment types still have different reporting rules.
The 2026 1099 threshold at a glance
| Payment or form | 2026 federal reporting threshold |
|---|---|
| Form 1099-NEC — nonemployee compensation | $2,000 |
| Form 1099-MISC — many rents, prizes, awards, other income, medical payments and other covered payments | $2,000 |
| Form 1099-MISC — royalties | $10 |
| Form 1099-MISC — gross proceeds paid to an attorney | $600 |
| Form 1099-NEC / 1099-MISC — certain direct sales for resale | $5,000 |
| Form 1099-K — third-party settlement organizations | More than $20,000 and more than 200 transactions |
| Form 1099-K — payment-card transactions | No minimum dollar threshold |
The $2,000 threshold change applies to specific payments covered by Internal Revenue Code sections 6041 and 6041A. Preparers should not assume that every threshold previously set at $600 has changed.
What changed for Form 1099-NEC in 2026?
For 2026, a business generally must file Form 1099-NEC when it pays $2,000 or more in nonemployee compensation to a reportable payee during the calendar year.
Before 2026, that threshold was generally $600.
Nonemployee compensation can include payments such as:
- fees for services performed by an independent contractor
- commissions
- professional service fees
- prizes or awards for services
- certain payments to attorneys
The change applies to payments made after December 31, 2025.
Example
A business pays an independent contractor $1,800 for services during 2026.
Assuming no other reporting rule applies and no federal income tax was withheld under the backup-withholding rules, the business generally would not be required to issue Form 1099-NEC based solely on that payment amount.
If the same contractor received $2,200 during 2026, the payment would generally meet the Form 1099-NEC reporting threshold.
What changed for Form 1099-MISC?
The new $2,000 threshold also applies to many payments reported on Form 1099-MISC.
Examples include certain:
- rents
- prizes and awards
- other income payments
- medical and health care payments
- crop insurance proceeds
- nonqualified deferred compensation payments
However, Form 1099-MISC still contains important exceptions.
For example, the 2026 instructions continue to use a $10 threshold for royalties and a $600 threshold for gross proceeds paid to an attorney.
That is why preparers should identify the specific payment type before applying the new $2,000 threshold.
The 1099-K threshold is different
The 2026 change to Form 1099-NEC and certain Form 1099-MISC payments should not be confused with the separate rules for Form 1099-K.
For third-party settlement organizations such as payment apps and online marketplaces, a Form 1099-K is generally required when both of these conditions are met:
- payments exceed $20,000, and
- the number of transactions exceeds 200
Payment-card transactions are subject to different rules and do not have the same minimum reporting threshold.
Tax preparers should also remember that a taxpayer may receive a Form 1099-K even when the federal reporting threshold is not met.
A higher 1099 threshold does not make the income tax-free
The reporting threshold determines when a payer is generally required to issue an information return. It does not determine whether the underlying income is taxable.
A contractor who earns $1,500 may not receive Form 1099-NEC under the new 2026 threshold, but that does not automatically exclude the $1,500 from taxable income.
This distinction will be especially important when clients assume that income below the new reporting threshold does not have to be reported.
What about backup withholding?
The new law also increased the threshold used for certain payments subject to backup-withholding rules from $600 to $2,000 for 2026.
However, special rules still apply. For example, the IRS instructions require Form 1099-NEC or Form 1099-MISC reporting when federal income tax was withheld under the backup-withholding rules, even if the payment amount is below the normal reporting threshold.
Preparers should check the applicable information-return instructions rather than relying only on the headline $2,000 figure.
The $2,000 amount will not stay fixed
The $2,000 threshold applies for calendar year 2026.
Beginning after 2026, the threshold is subject to annual inflation adjustment. That means preparers should verify the applicable threshold each year rather than assuming the 2026 amount remains unchanged.
What tax preparers should watch for in 2026
The practical challenge with the new rule is not simply remembering “$2,000 instead of $600.”
Preparers should verify:
- Which Form 1099 applies. The threshold depends on the form and payment type.
- When the payment was made. The new threshold applies to payments made after December 31, 2025.
- Whether an exception applies. Royalties, attorney payments, direct sales and other categories can have different thresholds.
- Whether backup withholding occurred. Reporting can still be required below the normal threshold.
- Whether the client is confusing reporting with taxability. Income can still be taxable even when no Form 1099 is issued.
- Whether state reporting rules differ. State information-reporting requirements do not always mirror the federal rules.
Frequently asked questions
What is the Form 1099-NEC threshold for 2026?
The federal reporting threshold for nonemployee compensation reported on Form 1099-NEC generally increases from $600 to $2,000 for payments made in calendar year 2026.
Is the 2026 Form 1099-MISC threshold also $2,000?
The $2,000 threshold applies to many Form 1099-MISC payment categories, but not all of them. For example, the 2026 instructions continue to use a $10 threshold for royalties and a $600 threshold for gross proceeds paid to an attorney.
Did the Form 1099-K threshold change to $2,000?
No. Form 1099-K has separate reporting rules. For third-party settlement organizations, the federal threshold is generally more than $20,000 and more than 200 transactions.
Does income under $2,000 still have to be reported?
Potentially, yes. The Form 1099 reporting threshold determines when a payer generally must issue an information return. It does not determine whether the recipient's income is taxable.
Will the 1099 threshold increase again in 2027?
The $2,000 base threshold is scheduled to be adjusted for inflation for calendar years after 2026. Tax preparers should verify the IRS threshold applicable to each reporting year.
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