If you paid a contractor, freelancer, or vendor in 2026, you’ll likely owe some of them a 1099 in a few months, and this is the first year the rules are different. For payments made after December 31, 2025, the filing threshold for Form 1099-NEC and Form 1099-MISC rose from $600 to $2,000. The forms covering 2026 payments are due February 1, 2027.
That sounds like less work, and for some businesses it is. But the higher number doesn’t remove the need for good records. It just moves the line, and the line is based on what you paid each person across the whole year, not on any single invoice. October is the right time to find out where your vendors stand, while you can still fix problems instead of discovering them in January.
Key takeaways
- The 1099-NEC and 1099-MISC threshold is now $2,000 for payments made in 2026, up from $600. The IRS says it may be adjusted for inflation starting in 2027.
- The test is your total paid to one payee in the calendar year, not the size of one payment.
- Forms for 2026 payments are due February 1, 2027, to the IRS and to the recipient.
- The 1099-K threshold is a separate rule for payment apps and marketplaces: more than $20,000 and more than 200 transactions.
- You still want a W-9 from every vendor before you pay them. A vendor under $2,000 in June can be over it by December.
- A few categories have their own minimums, so check the box rules for what you paid before you assume $2,000 covers everything.
In this article
- What changed, and what didn’t
- Who still gets a 1099 from you
- A worked example
- The 1099-K is a different rule
- Your Q4 checklist
- State rules and late-filing risk
- Frequently asked questions
What changed, and what didn’t
Congress raised the reporting floor in the One Big Beautiful Bill Act. According to the IRS, the base threshold under the law for these forms is now $2,000 for payments after 2025, indexed for inflation in later years. The same bulletin applies the change to backup withholding too, which matters more than most owners realize (more on that below).
Two details trip people up:
The forms you filed this past winter still used $600. Those covered 2025 payments. The forms you file in early 2027 are the first ones under the $2,000 rule.
It’s an annual total per payee. Pay one designer four separate $600 invoices, and you’ve paid $2,400. Each invoice looked small. The year did not.
What didn’t change: who counts as a reportable payee, the need for accurate names and taxpayer IDs, and the deadline pressure in January. Some categories also keep their own minimums, so check the current Instructions for Forms 1099-MISC and 1099-NEC box by box. Legal payments to attorneys are one to double-check.
Who still gets a 1099 from you
Run each vendor through four questions:
- Did you pay them $2,000 or more in 2026 for services or another reportable category?
- Are they an individual, sole proprietor, partnership, or LLC taxed that way? Payments to C corporations and S corporations are generally exempt, though attorneys and certain medical payments are exceptions.
- Was it a business payment, not a personal one, and not a reimbursement of documented expenses?
- Did you pay by check, ACH, or cash? Card and payment-app payments are generally reported by the processor on a 1099-K, not by you.
Contractors, consultants, freelance designers, and cleaning or landscaping crews paid by check or ACH usually land in the “yes” pile. Software subscriptions paid by card, utilities, and inventory purchases usually don’t.
A worked example
Say you run a small marketing agency and paid these vendors during 2026:
| Vendor | Type | Total paid | How paid | 1099 from you? |
|---|---|---|---|---|
| Maria, freelance designer | Sole proprietor | $4,800 | ACH | Yes |
| Dev Co LLC (taxed as S corp) | Corporation | $9,000 | Check | Generally no |
| Sam, bookkeeper | Sole proprietor | $1,950 | Check | No (under $2,000) |
| Local print shop | Sole proprietor | $2,300 | Credit card | No (card payments go on a 1099-K) |
| Lee, copywriter | Sole proprietor | $2,000 | ACH | Yes (at the threshold) |
Two lessons here. First, Sam was a $600-rule vendor last year and isn’t this year, so your list may shrink. Second, the print shop looks like a “yes” by dollar amount and isn’t, because of how you paid. Your accounting software won’t always catch that for you, which is why a quick Q4 review beats a January scramble.
The 1099-K is a different rule
People use “the 1099 threshold” to mean several forms, so it helps to separate them. Form 1099-K is filed by payment apps and online marketplaces, not by you as a business paying vendors. The IRS has confirmed the threshold reverted to more than $20,000 in payments and more than 200 transactions.
If you sell through Etsy, PayPal, Stripe-connected marketplaces, or similar platforms, you may receive fewer 1099-Ks than you expected. Your income is still taxable with or without a form, so your books need to capture every dollar. Our ecommerce bookkeeping guide shows how to reconcile platform payouts to your records.
Your Q4 checklist
Collect a W-9 from every vendor before the next payment. It gives you the legal name, tax classification, address, and taxpayer ID you’ll need. A vendor who stays under $2,000 doesn’t need a 1099, but you won’t know that until December, and chasing a W-9 in January is a slow, awkward process. If a vendor who should have given you a W-9 refuses, backup withholding at 24% can apply once payments reach the reporting threshold, which is now $2,000.
Total your vendors by payee, not invoice. Run a vendor spend report for January 1 through today and sort by total paid. Anyone near $2,000 gets a closer look.
Check how each payment was made. Flag any vendor you paid mostly by card, since those amounts may drop out of your 1099 totals.
Fix the coding. Contractor payments hiding in “Miscellaneous” or “Supplies” won’t show up in a 1099 report. This pairs well with the other tasks in our year-end tax planning guide.
Choose who files. Many small businesses file through their accounting software, a payroll provider, or their CPA. Decide by early December, since e-filing gets busy at the end of January.
State rules and late-filing risk
The federal number isn’t the only one that matters. Some states have their own 1099 filing requirements or thresholds and may not follow the federal change automatically, so check your state before you assume a vendor under $2,000 needs nothing.
The IRS also penalizes late or incorrect information returns per form, and the penalty grows the longer you wait. For a few vendors, that’s manageable. For a business with 30 contractors and no W-9s on file, it adds up, and weak records can raise questions about whether those payments were deductible at all.
Get your 1099s ready before the holidays
The new threshold shrinks the pile of forms, but it doesn’t shrink the need for tidy vendor records. Businesses that collect W-9s early, code payments correctly, and review totals in Q4 get through January in an afternoon. Those that don’t spend February fixing it.
If you’d like help sorting your 1099 list, cleaning up your books before year-end, or handling the filings for you, schedule a consultation with AP CPA Advisors, or call us at [phone number].
This article is general information, not tax advice. Rules and thresholds can change, and your situation may differ. Talk with a qualified tax professional before acting.
Frequently asked questions
What is the 1099 threshold for 2026?
For Form 1099-NEC and most 1099-MISC categories, you must file when you pay one payee $2,000 or more during the year, for payments made after December 31, 2025. A few categories have different minimums, so check the IRS instructions for the box you’re using.
When are 1099-NEC forms due for 2026 payments?
February 1, 2027. January 31 falls on a Sunday, so the deadline moves to the next business day. The recipient’s copy is due on the same date.
Do I still need a W-9 from vendors I paid less than $2,000?
It’s a good idea. Totals can cross the threshold late in the year, and a W-9 on file also protects you from backup withholding problems. Collect one before the first payment instead of waiting.
Does the $2,000 rule apply to Form 1099-K?
No. The 1099-K is filed by payment apps and marketplaces, and its threshold is more than $20,000 and more than 200 transactions.
Do I send a 1099 for payments made by credit card?
Generally not. The processor reports card and payment-app transactions on Form 1099-K, so you normally leave them out of your own 1099 totals.
Will the threshold change again after 2026?
The IRS says it may adjust the $2,000 figure for inflation starting in 2027. Plan around the current number and recheck it each fall.