1099 Threshold 2026: The New $2,000 Rule and How to Issue a 1099

For most payments made in 2026, a business generally must file Form 1099-NEC or Form 1099-MISC once it has paid a payee $2,000 or more during the year. Before 2026 the threshold was $600. The forms that cover 2026 payments are due in early 2027, and a few kinds of payment still use a lower threshold.

The IRS puts the change in three sentences: "For payments made before 2026, the reporting threshold is $600. For payments made in 2026, the reporting threshold is $2,000. For payments made after 2026, see Pub. 1099 for the inflation-adjusted reporting threshold."

What changed for 2026, and what didn't?

The new figure applies to payments made in 2026, not to forms filed in 2026. The 1099s businesses sent out in January 2026 covered 2025 payments, so they still used $600. The first forms filed under the $2,000 rule are the ones due in early 2027.

The $2,000 threshold may be adjusted for inflation beginning in calendar year 2027, according to the IRS instructions. The same change applies to backup withholding: the instructions describe the new minimum as the threshold "for reporting certain payments required to be reported on certain information returns and/or perform backup withholding on those payments."

Three things did not move.

Gross proceeds paid to an attorney stay at $600. These are payments to an attorney that are not for the attorney's own services. The IRS gives a settlement as the example. The instructions require Form 1099-MISC for "At least $600 in gross proceeds paid to an attorney (box 10)," covering payments made "in connection with legal services, but not for the attorney’s services, for example, as in a settlement agreement." Fees for the attorney's own work are different. They follow the new $2,000 threshold and go on Form 1099-NEC.

Royalties stay at $10. The 1099-MISC rule still reads "At least $10 in royalties."

Backup withholding still means a form, whatever the amount. The 1099-NEC instructions say: "You must also file Form 1099-NEC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment." The 1099-MISC instructions carry the same sentence.

Form 1099-K runs on its own rules. The One, Big, Beautiful Bill restored the older 1099-K threshold retroactively, and the IRS confirmed that "third party settlement organizations are not required to file Forms 1099-K unless the gross amount of reportable payment transactions to a payee exceeds $20,000 and the number of transactions exceeds 200." Both conditions must be met.

Who needs a 1099 for 2026 payments?

The rule covers payments your business makes, not personal ones. The instructions require Form 1099-NEC "for each person in the course of your business during the year to whom you have paid at least $2,000" for services by a non-employee or for payments to an attorney. Paying a plumber to fix your own home does not count. Paying a plumber to fix your shop or office does.

The usual payees are individuals, sole proprietors, partnerships, and LLCs that are not taxed as corporations. If you aren't sure whether someone is a contractor or an employee, settle that first. Our guide to 1099 vs W-2 classification covers it.

Do you send a 1099 to an LLC?

It depends on how the LLC is taxed, and the Form W-9 tells you. Line 3a asks the payee to "Check the appropriate box for federal tax classification of the entity/individual whose name is entered on line 1." An LLC checks the "LLC" box and enters "the appropriate code (C, S, or P) for the tax classification of the LLC, unless it is a disregarded entity. A disregarded entity should instead check the appropriate box for the tax classification of its owner."

In practice:

• "C" or "S". The LLC is treated as a corporation. The IRS exempts "payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation)," so most payments to it need no 1099 (see the next section).
• "P". The LLC is a partnership. The IRS's test for nonemployee compensation covers payments made "to an individual, partnership, estate, or, in some cases, a corporation," so payments of $2,000 or more need a 1099.
• Single-member LLC with the owner's box checked. The LLC is disregarded, and the IRS has you report under the owner: "enter the owner's name only on the first name line and the LLC's name on the second name line. For the TIN, enter the owner's SSN (or EIN, if applicable)." If the owner is an individual, treat the payment as you would a payment to that individual.

What about payments to corporations?

Most payments to a corporation are not reported. The instructions list among payments not reported: "Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation)."

The exceptions most businesses run into are legal and medical, and the instructions spell each one out:

• Attorneys' fees are reported even when the law firm is a corporation. "Attorneys’ fees of $2,000 or more paid in the course of your trade or business are reportable in box 1a of Form 1099-NEC."
• Gross proceeds paid to an attorney are reported at $600, as above.
• Medical and health care payments of $2,000 or more go in box 6 of Form 1099-MISC. If the provider is incorporated, "list the corporation as the recipient rather than the individual providing the services."

The IRS's full list of payments to corporations that must generally still be reported has six items. On Form 1099-MISC: medical and health care payments, gross proceeds paid to an attorney, substitute payments in lieu of dividends or tax-exempt interest, and cash payments for fish bought for resale. On Form 1099-NEC: attorneys' fees, and payments by a federal executive agency for services. Accounting, bookkeeping, consulting and IT services paid to a corporation are not on that list. If your question is specifically about S corporations, our guide on whether S corps receive 1099 forms covers it.

What if you paid by card or through a payment network?

Then you leave that payment off your 1099-NEC or 1099-MISC. The IRS instructions say: "Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC or Form 1099-NEC."

That sentence covers two separate obligations, and only the first is yours:

• Your 1099-NEC and 1099-MISC. Card payments and third-party network transactions are excluded from the forms you file. The exclusion is limited to what the IRS names. A payment by check is not one of them, so it still counts toward your $2,000 threshold.
• The processor's Form 1099-K. Whether a 1099-K is filed for your payee is the payment settlement entity's obligation (the card processor or payment network), under the separate Form 1099-K rules. You don't file it, and a payment you made by card may not appear on one. Third party settlement organizations, for example, do not have to file a 1099-K for a payee unless that payee's payments exceed $20,000 and the number of transactions exceeds 200.

Track how you paid each contractor during the year. A contractor you paid $3,000 by check and $1,500 by card has $3,000 that counts toward your 1099-NEC, not $4,500.

How do you issue a 1099?

1. Get a Form W-9 before the first payment. It gives you the payee's legal name, taxpayer identification number (TIN) and tax classification. Without it you may have to withhold. The W-9 explains that payers "must under certain conditions withhold and pay to the IRS 24% of such payments," and that payments are subject to backup withholding if the payee does "not furnish your TIN to the requester."
2. Track totals per payee for the calendar year. Flag anyone who reaches $2,000, and any attorney who receives $600 or more in gross proceeds.
3. Choose the form and box. Use the table at the top of this article. Contractor services and attorneys' fees go on Form 1099-NEC, box 1a. Rents, prizes, other income, medical payments, royalties and attorney gross proceeds go on Form 1099-MISC.
4. File with the IRS. E-filing is mandatory once you have 10 information returns in total. The IRS says: "If you are required to file 10 or more information returns during the year, you must e-file. The 10-or-more requirement does not apply separately to each type of form." The IRS's own portal, IRIS, "is a free service." Below 10 forms you can still file on paper with Form 1096 as the cover sheet.
5. Send each payee their copy by the deadline in the next section.
6. Send state copies where required. New Jersey asks for them; see the state section below.
7. Correct mistakes with a corrected form. If an amount or TIN turns out to be wrong after filing, file a corrected form.

What's new on the 2026 forms?

Forms 1099-NEC and 1099-MISC have new boxes for cash tips and qualified overtime compensation. "P.L. 119-21, section 70201, requires the reporting of cash tips. These new boxes were added to facilitate this reporting requirement for Forms 1099-NEC and 1099-MISC." Likewise, "P.L. 119-21, Section 70202(a), requires the reporting of overtime compensation."

Each box reports a specific part of the payment, not the payee's whole pay:

• Cash tips are the part of the payment designated as tips. In the instructions' words, "Cash tips include tips paid in cash or charged by customers." The TTOC box identifies the payee's tipped occupation.
• Qualified overtime compensation is only the premium part of overtime pay. The IRS defines it as "compensation that is paid to an individual required under section 7 of the Fair Labor Standards Act (FLSA) of 1938 that is more than the regular rate at which the individual is paid. For example, only the “half” portion of “time-and-a-half” compensation would be reported in box 1d." On Form 1099-MISC, the same amount goes in box 14.

Most businesses that pay professional contractors will leave these boxes empty. They apply only when an amount you report includes cash tips or qualified overtime compensation.

When are 2026 1099s due?

The IRS rule is: "Section 6071(c) requires you to file Form 1099-NEC on or before January 31, using either paper or electronic filing procedures. File Form 1099-MISC by February 28, if you file on paper, or March 31, if you file electronically. If any date shown falls on a Saturday, Sunday, or legal holiday in the District of Columbia or where the return is to be filed, the due date is the next business day." Payees must receive their copies by January 31. For Form 1099-MISC with amounts in box 8 or box 10, the payee deadline is February 15.

In 2027, several of those dates land on a weekend or a holiday.

In 2027, January 31 and February 28 fall on Sundays, and February 15 is Washington's Birthday, a federal holiday on OPM's 2027 schedule. New Jersey's Treasury lists the same date, Presidents' Day, February 15, 2027, as a holiday.

Do New Jersey, California and New York follow the $2,000 rule?

Not automatically. Each state sets its own reporting rules, and two of the three have not moved.

New Jersey. New Jersey's employer withholding guide (NJ-WT, September 2025) says: "You must provide New Jersey with copies of 1099 information returns when the amount paid or credited is $1,000 or more in a calendar year or if any New Jersey Income Tax was withheld from the payment." It also says: "You must file Form 1099 information returns on or before February 15 of the following year. If February 15 falls on a weekend or holiday, the due date is the next business day." So a New Jersey business that paid a contractor between $1,000 and $1,999 in 2026 may owe New Jersey a 1099 even though no federal form is required. New Jersey's guide, last revised in September 2025, does not mention the new federal threshold, so check it again before filing.

California. California's reporting runs through the Employment Development Department and happens during the year, not at year-end. EDD says you must report an independent contractor "if you pay compensation or enter into a contract with an independent contractor and the following statements all apply: You are required to file a federal Nonemployee Compensation (Form 1099-NEC) or a Miscellaneous Information (Form 1099-MISC) for the services performed by the independent contractor. You pay the independent contractor $600 or more, or enter into a contract for $600 or more. The independent contractor is an individual, sole proprietor, or single-member LLC." The report is due "within 20 calendar days." EDD's current employer guide, DE 44 (Rev. 52, 4-26), also uses $600. None of these EDD sources addresses the federal $2,000 change.

New York. New York's rule is about new-hire reporting, not 1099s. The Department of Taxation and Finance says: "Please be aware that effective January 1, 2022, employers are required to report individuals under an independent contractor arrangement with contracts in excess of $2,500."

A worked example

Illustration only, not a client case.

A design studio, an LLC taxed as a partnership, makes these business payments in 2026:

If the studio is in New Jersey, the photographer's $1,500 is the payment to check against New Jersey's $1,000 rule. If it is in California, check each payee against EDD's DE 542 rule above, which runs on a 20-day clock, not a year-end one.

What mistakes should you avoid in the first $2,000 year?

• Stopping W-9 collection. You still need the payee's TIN and classification to know whether a form is due, and to avoid backup withholding.
• Using $2,000 for the wrong year. Payments made in 2025 used $600. The $2,000 figure starts with payments made in 2026.
• Putting card or payment-network payments on a 1099-NEC. They are excluded from your forms. Any Form 1099-K reporting is the processor's, under separate rules.
• Missing the $600 attorney rule. Settlement funds paid through an attorney are still reported at $600.
• Forgetting the state copy. New Jersey's $1,000 rule is separate from the federal threshold.
• Treating California as a year-end task. DE 542 is due within 20 days.
• Telling a contractor that income under $2,000 isn't taxable. The threshold only decides whether you file a form. The recipient still owes tax on it. The IRS is direct about this: "You must report all income on your tax return, even if you don’t receive Forms 1099 from the businesses that pay you."

FAQs About the 1099 Threshold in 2026

1. How much can I pay a contractor without a 1099 in 2026?
Under $2,000 in total for the year, as long as you did not backup-withhold from them and the payment is not one of the lower-threshold types: attorney gross proceeds at $600, or royalties at $10. State rules can be lower. New Jersey's is $1,000; see the state section above.

2. Is $600 still the limit for 1099s?
Only for payments made in 2025 and earlier, and for gross proceeds paid to an attorney. For most payments made in 2026, the threshold is $2,000.

3. How much can you make in 2026 and not get a 1099?
A payer is not required to send you a 1099-NEC if it paid you less than $2,000 during 2026. The income is still taxable and belongs on your return.

4. Does the $20,000 Form 1099-K threshold apply to 1099-NEC and 1099-MISC?
No. The $20,000 figure applies only to Form 1099-K. A third party settlement organization does not have to file a Form 1099-K for a payee unless the payee's payments exceed $20,000 and the number of transactions exceeds 200. Forms 1099-NEC and 1099-MISC, which a business files for its own payees, have their own threshold: $2,000 for most payments made in 2026. Neither threshold changes what is taxable. Income is reportable whether or not a form is filed.

5. How can I issue a 1099 to someone?
Collect a Form W-9, total what you paid them for the year, and file Form 1099-NEC or 1099-MISC with the IRS. Then give them their copy by the deadline. If you file 10 or more information returns in total, you must e-file.

6. Can I make a 1099 on my own?
Yes. The IRS's IRIS portal lets businesses e-file information returns and "is a free service." If you file on paper, Copy A must be the official scannable form. The IRS states that "you cannot file Form 1096 or Copy A of Forms … 1099 … that you print from the IRS website," though you can use a printed Copy B for the recipient.

7. What is required to issue a 1099?
The payee's legal name, address, taxpayer identification number and tax classification, all from their Form W-9. You also need the total paid in the year and the correct box for each type of payment.

8. Do I need to send a 1099 to an S corporation?
Generally no, because payments to corporations are usually not reported. The exceptions are attorneys' fees, attorney gross proceeds, and medical and health care payments. Our guide on whether S corps receive 1099 forms goes through the details.

Getting your 1099s right this year

The first $2,000 year is when vendor lists get cleaned up. That means collecting W-9s, sorting card payments from check payments, and catching the New Jersey and California rules before they become notices. GTA Accounting Group prepares and files year-end 1099s as part of its New Jersey payroll services, New York payroll services and California payroll services, and reviews vendor 1099 compliance through its accounts payable management services.

This article is general information, not tax advice for your specific situation. Confirm current figures against IRS/state guidance or speak with a licensed professional.

Sources

Every rule stated traces to one of the following. All were read at source on October 8, 2026.

• IRS, Am I required to file a Form 1099 or other information return?: $600 before 2026, $2,000 for 2026, inflation-adjusted after.
• IRS, Instructions for Forms 1099-MISC and 1099-NEC, the edition for filing 2026 information in early 2027 (page last updated July 1, 2026, and read October 8, 2026; the IRS labels this revision "December 2026"): thresholds by box, the nonemployee compensation test, attorney rules, payments to corporations, the Form 1099-K carve-out, filing dates, new tip and overtime boxes.
• IRS, Publication 1099 (2026), General Instructions for Certain Information Returns: payee-statement dates, paper filing with Form 1096.
• IRS, General Instructions for Certain Information Returns (2025), the current edition on October 8, 2026: the 10-return e-file rule, IRIS, corrections, reporting a single-member LLC under its owner.
• IRS, IR-2025-107 (October 23, 2025): Form 1099-K threshold of $20,000 and 200 transactions.
• IRS, E-file information returns with IRIS.
• IRS, Form W-9 (Rev. March 2024): line 3a tax classification, backup withholding.
• IRS, Manage taxes for your gig work: income is reportable without a 1099.
• New Jersey Division of Taxation, NJ-WT Income Tax Withholding Instructions (September 2025), "1099 Reporting".
• California Employment Development Department, Independent Contractor Reporting and California Employer's Guide, DE 44 Rev. 52 (4-26).
• New York State Department of Taxation and Finance, New hire reporting.
• U.S. Office of Personnel Management, Federal holidays (2027 schedule), and New Jersey Treasury, Bank holidays (2027 column): the holidays that move the 2027 due dates.