## Major 1099 Threshold Changes Coming
The IRS has announced significant changes to 1099 reporting thresholds that will affect businesses and self-employed individuals starting in 2026.
Current Thresholds (2024-2025)
Form 1099-NEC: - **Threshold:** $600 - Report payments of $600+ to independent contractors
Form 1099-MISC: - **Most boxes:** $600 - **Royalties:** $10 - Report various payment types above thresholds
Form 1099-K: - **2024:** $5,000 (phased approach) - **2025:** $2,500 (planned) - From payment networks (PayPal, Venmo, card processors)
The Big Change: $600 to $2,000
Starting in 2026: The reporting threshold for 1099-NEC and 1099-MISC will increase from **$600 to $2,000**.
What This Means: - Payments under $2,000 won't require 1099 reporting - Fewer forms to file for small payments - Reduced administrative burden for businesses
Important Notes: - This applies to payments made in 2026 and later - 2025 payments still use $600 threshold - Recipients must still report all income (regardless of 1099)
1099-K Threshold Changes
The Complicated History:
- Original Plan (2022):
- Threshold drops to $600
- Massive increase in 1099-Ks
- IRS Delay:
- Postponed due to concerns
- Would have overwhelmed taxpayers
- Phased Approach:
- 2024: $5,000 threshold
- 2025: $2,500 threshold
- 2026+: $600 threshold (original plan)
Who Gets 1099-K? - Sellers on eBay, Etsy, etc. - Gig workers using payment apps - Anyone receiving payments through third-party networks
Impact on Businesses
Positive Changes: - Fewer forms to prepare - Reduced compliance costs - Less administrative burden
Considerations: - Still need to track all payments - Recipients still owe taxes - Don't assume no 1099 means no taxable income
Impact on Freelancers/Contractors
What Changes: - May receive fewer 1099-NECs - 1099-Ks may capture more transactions
What Stays the Same: - All income is still taxable - Must report income even without 1099 - Self-employment tax still applies
Timeline Summary
| Tax Year | 1099-NEC/MISC Threshold | 1099-K Threshold | |----------|------------------------|------------------| | 2024 | $600 | $5,000 | | 2025 | $600 | $2,500 | | 2026 | $2,000 | $600 |
Planning for These Changes
For Businesses: 1. Continue tracking all payments 2. Update systems for new thresholds 3. Communicate with contractors about changes 4. Don't change payment patterns based on thresholds
For Contractors: 1. Track ALL income regardless of 1099s 2. Expect more 1099-Ks from payment platforms 3. Keep your own records 4. Report income even without forms
Common Questions
If I don't get a 1099, is the income tax-free? **No.** All income is taxable regardless of whether you receive a 1099.
Do the threshold changes affect 2025 filing? **No.** The $2,000 threshold applies to payments made in 2026, filed in 2027.
Should I split payments to avoid thresholds? **No.** This could be considered tax evasion. Pay contractors fairly based on work performed.
Will states follow the federal threshold changes? **Varies.** Some states have their own thresholds. Check your state's requirements.
Stay Compliant
Regardless of threshold changes, proper documentation is essential:
- Track all payments to contractors
- Collect W-9s before paying
- Create accurate 1099s when required
- Keep records for at least 4 years
Generate Your 1099 Forms
Stay compliant with current requirements:
- 1099-NEC for contractor payments ($600+ through 2025)
- 1099-MISC for other payment types
- IRS-compliant format
- Instant PDF download
[Create Your 1099 Forms →](/)
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*Tax laws change frequently. Consult a tax professional for the most current information.*
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