The IRS reporting threshold for Form 1099-NEC and Form 1099-MISC nonemployee compensation payments rises from $600 to $2,000 for payments made in 2026 and later years. Fewer contractors will cross the line that requires a 1099, but the filing deadline is unchanged: February 1, 2027 for 2026 payments, since January 31 falls on a Sunday.
What the old rule required
Under the prior rule, any business that paid an independent contractor $600 or more in a calendar year for services had to issue that contractor a Form 1099-NEC, whether the total was paid in one invoice or spread across a dozen small ones. The $600 figure had been in place for decades, so routine, small vendor payments regularly generated a filing obligation that mattered more as a paperwork burden than as meaningful income reporting.
What changes now
For payments made in 2026 and later, that threshold moves to $2,000. A contractor paid a modest amount across the year for occasional work, one that stays under the new threshold, no longer triggers a 1099-NEC. A contractor whose total crosses the $2,000 mark still needs one. The rule change does not touch Form 1099-K for third-party payment processors, and it does not change how you track the payments themselves during the year, only whether a form has to be issued once the year closes.
Why this still needs tracking, not just filing
A common mistake is a business treating the new threshold as a reason to stop tracking small vendor payments carefully during the year, on the assumption that most of them will land under $2,000 anyway. That reasoning breaks the first time a vendor who looked like a one-off small job turns into a recurring relationship that crosses $2,000 by November. Without a running total by vendor, the finance team ends up reconstructing a year of invoices in January under deadline pressure. Form 1099-NEC must still be filed with the IRS and furnished to recipients by January 31 each year (February 1, 2027 for 2026 payments, since January 31, 2027 falls on a Sunday), and that filing deadline is separate from the reporting-threshold change.
What this means for your W-9 process
Collecting a signed Form W-9 from every contractor before the first payment, not after the year ends, is the habit that makes the January 31 deadline manageable regardless of where the threshold sits. A vendor who starts small on a single project and grows into a recurring relationship should already have a W-9 on file well before the running total crosses $2,000. Our 1099 and vendor tracking work keeps a running total against the current threshold through the year, so nothing gets discovered in a scramble during the first week of January.
Preparation support, not the filing itself
We prepare the underlying 1099 data: vendor totals, W-9 status and the forms themselves in draft. A credentialed signer or your existing preparer handles the actual filing and any signature the IRS requires, consistent with how we frame every tax-adjacent service. Having vendor totals current well before the deadline, rather than reconstructed at the last minute, is what keeps that handoff simple regardless of how many vendors you pay in a given year.
State-level reporting does not automatically follow the federal change
A federal threshold change does not necessarily move every state's own reporting requirement in lockstep. Some states pull directly from the federal 1099-NEC filing through the Combined Federal/State Filing Program, while others maintain a separate state-level threshold or a separate filing process entirely. A business that ships or contracts across several states should not assume that a payment falling under the new $2,000 federal threshold is automatically exempt from every state's own reporting rule. This is worth checking state by state rather than guessing, since the penalty for a missed state filing is separate from any federal one.
A practical mid-year check
Rather than waiting until January to find out which vendors crossed $2,000, a short mid-year review of vendor totals against the new threshold catches problems while there is still time to collect a missing W-9. A vendor whose running total is already trending toward $2,000 by mid-year is exactly the case where an early nudge for a signed W-9 saves a January scramble. This is a small habit, but it is the difference between a filing season that starts with clean data and one that starts with a spreadsheet full of gaps.
Where this fits with your monthly books
1099 tracking works best when it rides on top of books that are already current. If your accounts payable process runs through monthly bookkeeping, vendor payments are categorized as they happen, which means the year-end 1099 exercise is a review of an existing total rather than a rebuild from twelve months of bank statements.
FAQ
Does the new $2,000 threshold apply to payments made in 2025?
No. The threshold applies to payments made in 2026 and later years. Payments made during 2025 are still measured against the $600 threshold that applied for that year.
Do I still need a W-9 from a contractor I expect to pay under $2,000?
Collecting the W-9 before the first payment is still the safer habit, because you often cannot predict in January whether a vendor relationship will grow past $2,000 by December.
Has the January 31 filing deadline changed along with the threshold?
No. Form 1099-NEC must still be filed with the IRS and furnished to recipients by January 31 each year (February 1, 2027 for 2026 payments, since January 31, 2027 falls on a Sunday), on paper or electronically, regardless of the higher reporting threshold.
Can Finbryn file our 1099s directly with the IRS?
We prepare the vendor data and draft forms as preparation support. Filing and signature are handled by a credentialed signer or your existing tax preparer, not by our team directly.
This article is general information, not preparation or filing advice for your specific situation.
Sources
- 1099
- contractors
- IRS