1099 Thresholds Change in 2026: $600 Rises to $2,000, 1099-K Back to $20,000
Bottom line: starting in 2026, the threshold for issuing Form 1099-NEC to independent contractors rises from $600 to $2,000 — if you pay someone less than $2,000 in a year, no form is required. Meanwhile, the 1099-K threshold reverts to the old standard of $20,000 AND 200 transactions. Both changes come from the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, and they meaningfully cut paperwork for small business owners.
1099-NEC / 1099-MISC: $600 becomes $2,000
The old rule: pay any independent contractor (mechanic, helper, outside bookkeeper) $600 or more in a calendar year, and you must issue a 1099-NEC by the end of the following January and file it with the IRS.
The new rule: for payments made in 2026 and later, the threshold rises to $2,000. Pay someone $1,800 across 2026 and no form is needed. Starting in 2027, the $2,000 will be adjusted annually for inflation.
Watch the timeline: payments made in 2025 still follow the $600 threshold — every 1099 due in early 2026 must still go out. The new threshold covers 2026 payments, reported on forms filed in early 2027.
1099-K: back to $20,000 + 200 transactions
The much-dreaded "$600 1099-K" is officially gone. OBBBA restores the old standard: platforms only issue a 1099-K if you receive more than $20,000 AND more than 200 transactions in a year. If you collect payments through Square or similar apps, far fewer of you will see this form.
A lower reporting burden does not mean tax-free income
This is the trap: not receiving a 1099 does not make the income tax-free. The tax law requires you to report all income; a 1099 is merely a copy of what someone else told the IRS. A contractor who earned $1,500 without receiving a form still must report it — and so must you for any payments you receive under the threshold.
Also note that some states have their own, much lower 1099-K thresholds, so state forms may still arrive.
FAQ
Which threshold applies to payments I made in 2025?
The old $600 threshold. The $2,000 threshold applies to payments made in 2026 and later, reported on forms filed in early 2027.
If I pay someone $1,500 and no longer need to issue a 1099, is that income tax-free for them?
No. The reporting threshold only affects the paperwork, not the tax. All income must be reported regardless of whether a form is issued.
When does the $20,000 1099-K threshold take effect?
OBBBA restores the $20,000 / 200-transaction standard effective for 2025 onward. The phased $600 / $2,500 rollout is repealed.
Will I get a 1099-K for Zelle payments?
Zelle generally does not issue 1099-Ks because of how it is structured. But again — no form does not mean no tax.
This article is general tax information, not personalized advice. Please consult a professional for your situation.