1099-NEC for 2026: the $2,000 threshold, the new form, and what to do before year-end

Most of what is written about Form 1099-NEC still says $600. For payments made during 2026 that is out of date. The tax law signed on July 4, 2025 raised the figure to $2,000, and the forms that reflect it are the ones businesses will file in early 2027.¹

This article covers the 2026 payment year only: what changed, what stayed the same, what the redesigned form asks for, and what a business can do in the last quarter to make January uneventful.

• $2,000Reporting threshold for payments made in 2026. It was $600 through 2025.
• Feb 1, 2027Due date for 2026 Forms 1099-NEC, to the contractor and to the IRS.
• Nov 19, 2026Last day the IRS’s FIRE system accepts returns. After that, e-filing goes through IRIS.

What changed, exactly

One sentence in the law did it: section 6041(a) of the tax code “is amended by striking ‘$600’ and inserting ‘$2,000’,” and the change applies “with respect to payments made after December 31, 2025.”¹ Four details follow from the wording.

• The test is “$2,000 or more,” not “more than $2,000.” A contractor paid exactly $2,000 in the year gets a form.²
• It is counted per payee, per calendar year. Ten payments of $250 reach it the same way one payment does.
• It will move. For years after 2026 the amount is adjusted for inflation and rounded to the nearest $100, so $2,000 is the figure for 2026 payments only.¹ The IRS had not published the 2027 figure when this was written.
• Forms for 2025 payments were unaffected. Those used $600. The IRS’s employer guide puts the two side by side: “payments of $600 or more made in 2025 ($2,000 or more for payments made in 2026).”³

The same law moved several boxes on the companion form, 1099-MISC, to $2,000 and left others alone. The instructions for the December 2026 forms set them out.⁴

Reporting thresholdsBy payment year

Payment	2025	2026
Fees to contractors 1099-NEC box 1a	$600	$2,000
Fees to attorneys 1099-NEC box 1a	$600	$2,000
Rent 1099-MISC box 1	$600	$2,000
Prizes and other income 1099-MISC box 3	$600	$2,000
Medical and health care payments 1099-MISC box 6	$600	$2,000
Gross proceeds paid to an attorney 1099-MISC box 10	$600	$600
Royalties 1099-MISC box 2	$10	$10
Backup withholding either form, box 4	Any amount	Any amount

Who gets a 1099-NEC

The dollar figure is the last of five questions, and most mistakes happen at one of the first four.

Does this payee get a 1099-NEC?2026 payments

1. Was it for services to your business?Personal payments are not reported. Neither are payments for merchandise, freight, or storage.
2. Is the payee someone other than your employee?Employees’ pay goes on Form W-2.
3. Is the payee not a corporation?Individuals, partnerships, and LLCs taxed as either get a form. Corporations, and LLCs taxed as C or S corporations, generally do not. Lawyers are the exception: incorporated or not, they get one.
4. Did you pay by check, cash, ACH, wire, or bank transfer?Card payments and payments through a network such as PayPal are the processor’s to report, not yours.
5. Did those payments total $2,000 or more in 2026?Only the payments that passed questions 1 to 4 count toward the total.

Five yeses: file a 1099-NEC for that payee by February 1, 2027.

Question 3: read the W-9

Whether a payee is a corporation is not something to guess from its name. Form W-9 answers it on line 3a, where an LLC must enter a code for how it is taxed: C, S, or P for partnership. An LLC with a single owner that is disregarded for tax purposes checks the box for its owner’s classification instead.⁵ “Smith Plumbing LLC” taxed as an S corporation is exempt. The same name on a W-9 marked as an individual is not.

Question 4: how you paid matters more than it used to

The instructions are explicit that 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… and are not subject to reporting on Form 1099-MISC or Form 1099-NEC.”⁴

Two consequences are worth knowing.

Some payments now go unreported by anyone. The same 2025 law restored the old threshold for payment networks: they file a 1099-K only when a payee receives more than $20,000 across more than 200 transactions.⁶ And the regulation that moves reporting from you to the network applies whether or not the network’s own threshold is met.⁷ A contractor you paid $8,000 through PayPal may receive no form from you and, unless their state sets a lower bar, none from PayPal. The income is still taxable to them. It is simply no longer anyone’s job to tell the IRS about it.

Bank-to-bank services stay on your side of the line. Zelle, for example, states that the law on payment networks does not apply to it and that it “does not issue 1099K forms.”⁸ A contractor paid by Zelle is in the same position as one paid by check.

For the books: this is a reason to record how each contractor payment was made. A vendor report that mixes card payments with checks will overstate who needs a form. One that separates them makes the January list a five-minute job.

The form itself is different

Form 1099-NEC was redesigned for 2026. Nonemployee compensation moves from box 1 to box 1a, and three boxes are new:⁴

• Box 1b, cash tips, and box 1c, a tipped occupation code. These exist because the 2025 law’s deduction for tips depends on tips being reported separately.
• Box 1d, overtime compensation. The IRS says this applies on a 1099 only in the unusual case of a worker who is an employee under wage-and-hour law but treated as a contractor for tax purposes.⁹

Most businesses will leave the new boxes empty. Two things still follow. Use the December 2026 revision of the form, because the IRS says of these revisions, “Do not use these revisions for prior years,” and the reverse holds for old stock.⁴ And if you do pay contractors who receive tips through you, note that the penalty relief the IRS granted for the 2025 changeover was limited to 2025.⁹

Deadlines for 2026 forms

The statutory date for Form 1099-NEC is January 31, for both the contractor’s copy and the IRS’s. When a due date “falls on a Saturday, Sunday, or legal holiday… the due date is the next business day,” and January 31, 2027 is a Sunday.⁴

Due dates2026 forms

Form	To the recipient	To the IRS
1099-NEC	Mon, Feb 1, 2027	Mon, Feb 1, 2027
1099-MISC	Mon, Feb 1, 2027	Mon, Mar 1, 2027 on paperWed, Mar 31, 2027 if e-filed

Three rules around those dates catch people every year.

There is no automatic extension for the 1099-NEC. A request has to be made on paper Form 8809 with a reason, allows a single 30 days if granted, and “does not extend the due date for furnishing statements to recipients.”¹⁰

Ten returns means e-filing, and the count is combined. “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.”¹¹ A business with seven W-2s and three 1099s is over the line.

The IRS’s filing system is changing underneath all of this. The long-running FIRE system accepts its last returns on November 19, 2026, at 3 p.m. Eastern. For 2026 forms, the Information Returns Intake System, IRIS, is the only way to e-file directly with the IRS.¹² IRIS requires a transmitter control code, and the IRS warns that the application “may take up to 45 days.”¹¹ If your payroll service, accounting software, or tax preparer files for you, this is their concern. If you file yourself, apply now rather than in January.

What a late or missing form costs

Penalties are charged per form, and they grow with the delay. These are the amounts for returns due in 2027.¹³

Penalty per formReturns due in 2027

When it is filed correctly	Per form
Within 30 days of the due date	$60
After 30 days, but by August 1	$130
After August 1, or never	$340
Intentional disregard	$690, or 10% if more

The copy owed to the IRS and the copy owed to the contractor are penalized separately.

W-9s and backup withholding

The threshold tells you who gets a form in January. It says nothing about when to collect a W-9, and the answer to that has not changed: before the first payment, from every service provider, whatever you expect the year’s total to be. There are three reasons.

• You cannot know in March who will pass $2,000 by December. Chasing a taxpayer ID number from someone you stopped using in May is the hardest part of every January.
• Without a number, you are supposed to withhold. A payer must “withhold on payments made until the TIN is furnished,” at 24%, and nonemployee compensation “is subject to backup withholding even if the payee has applied for and is awaiting a TIN.”¹¹ Any amount withheld is reported on a 1099 whatever the total paid.⁴
• The W-9 is what answers question 3 above. Without it you do not know whether the payee is exempt.

One confusing detail: the current Form W-9 is dated March 2024, before the law changed, and its own instructions still mention $600.⁵ It is still the right form to use. If you have filed 1099s before, the IRS’s TIN Matching program “lets you validate TIN and name combinations before submitting an information return.”¹⁴

Your state may not have followed

States set their own rules for copies of these forms, and they have not all moved to $2,000. A few examples, each from the state agency:

• California follows the new figure for its copy of the 1099-NEC: “$600 or more for tax year 2025 ($2,000 or more for tax year 2026).” But a separate California rule did not change. A business must still report an independent contractor to the Employment Development Department within 20 days of paying, or contracting to pay, $600 or more.¹⁵
• Wisconsin said in guidance reflecting its law as of January 30, 2026: “the threshold under Wisconsin law remains $600… A change to Wisconsin law is required to match the thresholds under federal law.”¹⁶
• Louisiana requires every business to file 1099-NECs electronically “regardless of the number filed,” and Oregon requires them through its own system by January 31 and does not take part in the federal program that forwards forms to states.¹⁷

The practical point is to keep tracking payments from the first dollar. A contractor paid $900 may need nothing federally and something from your state.

What to do before December 31

1. Run a year-to-date report of payments by vendor, split by how each was paid. Set card and payment-network payments aside.
2. Mark everyone at or near $2,000 by check, cash, or bank transfer, and anyone you will pay again before year-end.
3. Check that you hold a W-9 for each, and read line 3a. Ask now for any that are missing, while you still owe them money.
4. Check your state’s threshold and deadline, and widen the list if it is lower.
5. Count your information returns, W-2s included. At ten or more, plan to e-file.
6. Decide who files, and if it is you, apply for IRIS access now.
7. Make the W-9 part of setting up any new vendor from here on, so that next year’s list builds itself.

A higher threshold is not a tax break

The change reduces paperwork. It does not reduce anyone’s income. The IRS’s instructions note that payments which need not be reported “may be taxable to the recipient,” and its guidance for the self-employed says income must be reported “even if the income is… not reported on an information return form.”⁴¹⁸

If you are on the receiving end, expect fewer forms in 2027 than you got in 2026 for the same work. Your books, not the forms that arrive, are the record of what you earned, which is one more reason to keep them current through the year rather than rebuilding them from a stack of 1099s in February.

Sources

1. Public Law 119-21 (July 4, 2025), section 70433, “Increase in threshold for requiring information reporting with respect to certain payees.” Government Publishing Office.
2. Internal Revenue Code section 6041 and section 6041A, as amended. Legal Information Institute, Cornell Law School. Proposed regulations implementing the change: REG-113229-25, Internal Revenue Bulletin 2026-19, May 4, 2026.
3. Internal Revenue Service, Publication 15 (2026), Employer’s Tax Guide.
4. Internal Revenue Service, Instructions for Forms 1099-MISC and 1099-NEC, Rev. December 2026.
5. Internal Revenue Service, Form W-9, Request for Taxpayer Identification Number and Certification, Rev. March 2024.
6. Internal Revenue Service, Form 1099-K frequently asked questions (Fact Sheet 2025-08, October 23, 2025; page last reviewed September 29, 2026) and Understanding your Form 1099-K.
7. Treasury regulations, 26 CFR 1.6041-1, paragraph (a)(1)(iv).
8. Zelle, Does Zelle report how much money I receive to the IRS?
9. Internal Revenue Service, Fact Sheet 2026-13, August 2026, and Notice 2025-62.
10. Internal Revenue Service, Form 8809, Application for Extension of Time To File Information Returns, Rev. December 2025.
11. Internal Revenue Service, Publication 1099 (2026), General Instructions for Certain Information Returns.
12. Internal Revenue Service, Filing Information Returns Electronically (FIRE), page last reviewed August 7, 2026, and E-file information returns with IRIS.
13. Internal Revenue Service, Revenue Procedure 2025-32, Internal Revenue Bulletin 2025-45, November 3, 2025.
14. Internal Revenue Service, Taxpayer Identification Number (TIN) Matching. Page last reviewed August 10, 2026.
15. California Franchise Tax Board, Guide to information returns filed with California, updated January 29, 2026; Employment Development Department, Independent contractor reporting.
16. Wisconsin Department of Revenue, 2025 Fall Tax Updates: practitioner questions and answers.
17. Louisiana Department of Revenue, Revenue Information Bulletin 23-006, updated June 2026; Oregon Department of Revenue, iWire.
18. Internal Revenue Service, Gig economy tax center. Page last reviewed July 9, 2026.