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Form 1099-NEC Threshold Rises to $2,000: What Preparers and Payers Need to Know

The IRS raised the Form 1099-NEC reporting threshold to $2,000. See which 1099-MISC amounts changed, which stayed the same, and the filing dates.

What changed

The December 2026 revision of the Instructions for Forms 1099-MISC and 1099-NEC raises the minimum amount that triggers reporting. For tax years beginning after 2025, the threshold for reporting certain payments on certain information returns, and for backup withholding on those payments, increased to $2,000. The IRS says it may be adjusted for inflation beginning in calendar year 2027.

For small-business clients, the most visible effect is on Form 1099-NEC, the form used for nonemployee compensation in box 1a. The instructions also state that attorneys' fees of $2,000 or more paid in the course of your trade or business are reportable in box 1a.

Form 1099-MISC amounts at $2,000

On Form 1099-MISC, the instructions list $2,000 as the threshold for these payments:

  • Rents (box 1)
  • Prizes and awards, including certain non-government grants, and other income payments (box 3)
  • Generally, cash paid from a notional principal contract to an individual, partnership, or estate (box 3)
  • Medical and health care payments (box 6)
  • Crop insurance proceeds (box 9)
  • Section 409A deferrals (box 12)
  • Nonqualified deferred compensation (box 15)

Amounts that did not move to $2,000

Do not apply the new figure to everything. The instructions keep these amounts in place:

  • Royalties and broker payments in lieu of dividends or tax-exempt interest: $10 or more
  • Fishing boat proceeds: any amount
  • Gross proceeds paid to an attorney (Form 1099-MISC, box 10): $600 or more
  • Consumer products sold for resale: $5,000 or more, reported in box 7 of Form 1099-MISC or box 2 of Form 1099-NEC
  • Backup withholding on Form 1099-MISC: you must file for each person from whom you withheld any federal income tax, regardless of the amount of the payment

Filing dates

Form 1099-NEC is due on or before January 31, on paper or electronically. Form 1099-MISC is due February 28 if filed on paper, or March 31 if filed electronically. If a date falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.

The December 2026 revisions are meant for filing 2026 information with the IRS in early 2027, and for furnishing the information to recipients. Do not use them for prior years.

Other changes in this revision

  • New boxes for cash tips (1b on Form 1099-NEC, 13a on Form 1099-MISC), Treasury Tipped Occupation Codes (1c and 13b), and overtime compensation (1d and 14). The instructions tie the tips and overtime reporting to P.L. 119-21.
  • Excess golden parachute payments are no longer reported on Form 1099-MISC. They can now go in box 3 of Form 1099-NEC.
  • Address fields for the payer and recipient are now separate entry boxes.
  • The e-file threshold is 10 information returns, calculated by aggregating all information returns. This took effect for returns required to be filed on or after January 1, 2024.

What to tell clients

Report on these forms only payments made in the course of a trade or business. Personal payments are not reportable. Generally, payments to a corporation, including an LLC treated as a C or S corporation, do not need a Form 1099-MISC. There are exceptions, and the instructions say payments for legal services to corporations are still reportable.

Payments made by credit card or payment card, and certain other payments such as third-party network transactions, are reported by the payment settlement entity on Form 1099-K. They are not reported on Form 1099-MISC or Form 1099-NEC.

If a client rents a machine together with an operator, the instructions say to prorate the payment. The machine rental goes in box 1 of Form 1099-MISC, and the operator's charge goes in box 1a of Form 1099-NEC.

A higher threshold does not change who is responsible for tracking payments. Clients should keep records of what they pay each contractor and collect taxpayer identification numbers (a Form W-9 can be used). That way they know where each payment stands against the threshold.

This article summarizes the IRS instructions. For corrections, penalties, and general filing rules, see Pub. 1099 and the full Instructions for Forms 1099-MISC and 1099-NEC on IRS.gov.

Informational only, based on the IRS source linked above; not tax or legal advice for a specific situation.