The 1099 threshold for 2026 is $2,000. If your business pays a contractor $2,000 or more for services in 2026, you send them a Form 1099-NEC by February 1, 2027. That’s up from $600, the limit for payments made in 2025 and earlier. Below is who gets a 1099, what’s due when, and how the 1099-K rules work.
The change comes from the One Big Beautiful Bill Act, the 2025 tax law that IRS.gov also calls the Working Families Tax Cuts. It applies to payments made after December 31, 2025. The 1099 limit is about paperwork, not taxes. Your contractors still owe tax on every dollar they earn.
Last updated October 27, 2026. Amounts are for payments made in 2026, reported in early 2027.
Want the rest of this year’s changes? See all the 2026 tax changes for your return, or the key numbers for your 2026 return on one page.
1099 thresholds for 2026 at a glance
| Form 1099-NEC | |
|---|---|
| Payments to contractors for services | $2,000 |
| Attorney fees for legal services | $2,000 |
| Sales of consumer products for resale | $5,000 |
| Form 1099-MISC | |
| Rents | $2,000 |
| Prizes, awards and other income | $2,000 |
| Medical and health care payments | $2,000 |
| Royalties | $10 |
| Gross proceeds paid to an attorney | $600 |
| Form 1099-K | |
| Payment apps and online marketplaces | Over $20,000and over 200 transactions |
| Credit and debit card payments | No minimum |
| Good to know | |
| Backup withholding rate | 24% |
| Threshold for payments made in 2025 | $600 |
What is the 1099 threshold for 2026?
For payments made in 2026, the 1099 threshold, also called the 1099 limit, is $2,000 per person for the year. If your business pays one contractor $2,000 or more in total for services, you send them a Form 1099-NEC and file a copy with the IRS. Before 2026, the limit was $600.
The same $2,000 limit applies to most boxes on Form 1099-MISC, like rent and other income. Starting with payments made in 2027, the IRS will adjust the $2,000 for inflation each year, rounded to the nearest $100.
Examples:
- You pay a bookkeeper $1,800 in 2026. No 1099 is required.
- You pay a web designer $2,400 in 2026. Send a 1099-NEC.
- You pay a handyman $1,200 in March and $900 in October. That’s $2,100 for the year, so send a 1099-NEC.
Keep in mind: the threshold only decides whether you send a form. Your contractor still owes tax on every dollar, with or without a 1099.
Who gets a 1099-NEC?
Form 1099-NEC (Nonemployee Compensation) reports what your business paid people who aren’t your employees. You generally send one when all four of these are true:
- You paid someone who is not your employee
- You paid them for services, as part of your business
- They’re an individual, a partnership, an estate or, in some cases, a corporation
- You paid them $2,000 or more during 2026
You usually don’t need a 1099-NEC for:
- Your employees. They get a W-2.
- Corporations, including LLCs taxed as a C or S corporation. Law firms are the main exception.
- Payments for goods, like merchandise, freight or storage.
- Personal payments that aren’t for your business.
- Payments you made by credit card or through a payment app. Those are reported on Form 1099-K instead.
Ask every contractor for a Form W-9 before you pay them. It gives you their legal name, taxpayer identification number (TIN) and tax status, so you know whether they need a 1099.
What’s the difference between a 1099-NEC and a 1099-MISC?
A 1099-NEC is for services. A 1099-MISC is for most other business payments. Both use the $2,000 limit for payments made in 2026, with a few exceptions.
Use Form 1099-MISC for:
- Rent for business space or equipment ($2,000 or more)
- Prizes, awards and other income ($2,000 or more)
- Medical and health care payments ($2,000 or more), even to a corporation
- Royalties ($10 or more)
- Gross proceeds paid to an attorney, like a settlement paid through a lawyer ($600 or more)
If you pay rent to a property manager or real estate agent, you don’t send them a 1099-MISC. The manager reports the rent to the owner.
How does the 1099-K threshold work in 2026?
Form 1099-K comes from payment companies, not from you. For 2026, payment apps and online marketplaces only have to send a 1099-K when you receive more than $20,000 across more than 200 transactions in a year. Credit and debit card processors have no minimum.
- If you pay a contractor by card or payment app: you don’t send a 1099-NEC for those payments. The payment company reports them.
- If you get paid by card or payment app: you may or may not get a 1099-K. Either way, you must report all of your business income.
When are 1099s due in 2027?
For payments made in 2026, the 1099-NEC is due February 1, 2027, both to your contractor and to the IRS. The usual January 31 date falls on a Sunday in 2027, so it moves to the next business day.
| Form | To the recipient | To the IRS |
|---|---|---|
| 1099-NEC | Feb. 1, 2027 | Feb. 1, 2027 |
| 1099-MISC, on paper | Feb. 1, 2027 | March 1, 2027 |
| 1099-MISC, e-filed | Feb. 1, 2027 | March 31, 2027 |
Good to know:
- If you file 10 or more information returns in total, you must e-file. Count all of your forms together, not form by form.
- The IRS’s Information Returns Intake System (IRIS) lets you e-file 1099s for free.
- There’s no automatic extension for the 1099-NEC.
Need every other date for the 2027 filing season? See our 2027 tax deadlines.
What happens if you file a 1099 late?
The IRS charges a penalty for each late or incorrect 1099. For forms due in 2027, the penalty per form is:
- $60 if you file the correct form within 30 days of the due date
- $130 if you file it after 30 days but by August 1, 2027
- $340 if you file it after August 1, 2027, or not at all
A separate penalty of the same size can apply if your contractor doesn’t get their copy on time. If the IRS finds you ignored the rules on purpose, the penalty is at least $690 per form.
What if a contractor won’t give you their tax ID?
If a contractor doesn’t give you their TIN, you generally must hold back 24% of what you pay them and send it to the IRS. This is called backup withholding. For 2026, it starts once your payments to that person reach $2,000 for the year.
You report backup withholding on Form 945, and you must send a 1099 to anyone you withheld from, no matter the amount. The easy fix is to get a W-9 before the first payment.
Do you file 1099s with Arizona?
Usually not. The Arizona Department of Revenue only asks for copies of 1099s that show Arizona income tax withheld. If you didn’t withhold Arizona income tax, you don’t send Arizona a copy.
If you did withhold Arizona tax, the 1099s go to the Arizona Department of Revenue with your Form A1-R, the annual withholding reconciliation. Check the department’s current instructions before you file.
How do you get ready for 1099 season?
- List everyone your business paid for services in 2026.
- Add up each person’s total for the year. Flag anyone at $2,000 or more.
- Get a W-9 from anyone you don’t have one for.
- Check how you paid. Card and payment app payments don’t go on a 1099-NEC.
- Check each W-9 for corporations. Most don’t get a 1099-NEC, but law firms do.
- Decide how you’ll file. Ten or more forms in total means you must e-file.
- Put February 1, 2027 on your calendar.
Clean books make this quick. If yours aren’t there yet, our bookkeeping team can help.
1099 threshold FAQ
No. It applies to payments made in 2026, which you report in early 2027. Payments made in 2025 used the old $600 limit.
Yes. The threshold only decides whether the payer sends a 1099. All income is taxable, with or without a form.
It depends on how the LLC is taxed. A single-member LLC or one taxed as a partnership generally gets a 1099-NEC at $2,000 or more. An LLC taxed as a C or S corporation generally doesn’t, unless it’s a law firm. Check the tax status on their W-9.
It may. Starting with payments made in 2027, the IRS adjusts the $2,000 for inflation each year, rounded to the nearest $100.
No. Payments made by credit card, debit card or through a payment network are reported by the payment company on Form 1099-K.
About the author
Get help with your 1099s
Moon Valley Accounting & Tax Services helps Phoenix small business owners sort their vendors, collect W-9s and file 1099s on time. Book a free consultation and we’ll look at who needs a form from you this year. You can also see all of our tax, bookkeeping and payroll services.
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Sources
- IRS: Instructions for Forms 1099-MISC and 1099-NEC
- IRS: General Instructions for Certain Information Returns
- IRS: Rev. Proc. 2025-32 (penalty amounts for forms due in 2027)
- IRS: Form 1099-K FAQs
- IRS: About Form W-9
- IRS: E-file information returns with IRIS
- 26 U.S.C. § 6041 (the $2,000 threshold and inflation adjustment)
- 26 U.S.C. § 6041A (payments for services and direct sales)
- 26 U.S.C. § 6050W (Form 1099-K)
- 26 U.S.C. § 3406 (backup withholding)
- Arizona Department of Revenue: Form A1-R instructions
This article is general information, not tax advice for your situation. Tax rules can change, so talk with a tax professional before you file.