IRS Raises 1099 Reporting Threshold to $2,000 Starting in 2026

Big news for businesses, freelancers, and landlords: Starting with the 2026 tax year, the IRS is raising the reporting threshold for several types of payments from $600 to $2,000. This change, part of the One Big Beautiful Bill Act, is designed to reduce the administrative burden on payors and streamline tax reporting.

What’s Changing?

Previously, if you paid someone $600 or more for services, rent, or other qualifying payments, you were required to issue a Form 1099. Beginning in 2026, that threshold increases to $2,000, and will be adjusted annually for inflation starting in 2027.

 Payments Affected by the New Threshold:

The $2,000 threshold applies to payments reported on:

·       Form 1099-MISC, Box 1 – Rents

·       Form 1099-NEC, Box 1 – Nonemployee compensation

·       Form 1099-MISC, Box 3 – Prizes and awards, other income payments

·       Form 1099-MISC, Box 6 – Medical and health care payments

·       Form 1099-NEC, Box 1 & Form 1099-MISC, Box 10 – Payments to attorneys

·       Other specified payments – Including crop insurance proceeds and fishing boat proceeds

 What This Means for You

·       Fewer 1099s to issue for small, one-off payments under $2,000

·       Reduced risk of penalties for missed or incorrect filings

·       Simplified vendor tracking and year-end reporting

However, it’s still essential to track all payments accurately and collect W-9 forms from vendors, even if a 1099 isn’t required. Stay ahead of the curve by updating your accounting systems and vendor onboarding processes before the 2026 tax season begins. And as always, reach out to your GP advisor with any questions or concerns.