If you pay contractors, one of the numbers you’ve had memorized for years just changed. For payments made in 2026, the threshold for issuing a Form 1099-NEC went from $600 to $2,000.
That’s good news for your January to-do list. It doesn’t mean you can stop paying attention, though. Here’s what changed, what didn’t, and what I’d do about it this month.
What changed
For years, the rule was simple: pay a contractor $600 or more during the year for services, and you owed them (and the IRS) a Form 1099-NEC. Starting with payments made in 2026, that number is $2,000. The same change applies to most payments reported on Form 1099-MISC, such as rent.
After 2026, the threshold is set to adjust for inflation each year, so it may creep up a little over time.
In practical terms: if you paid your logo designer $900 this year, you generally won’t need to send them a 1099. If you paid your cleaning service $4,800, you still will.
What didn’t change
- The deadline. 1099-NECs are still due to both the contractor and the IRS by January 31. In 2027 that date lands on a Sunday, so the deadline moves to Monday, February 1.
- Who counts. The form still covers people and businesses you paid for services who aren’t your employees. Payments to corporations are generally exempt, with a few exceptions, attorneys being the big one.
- How you paid matters. Payments made by credit card, or through processors like PayPal, generally don’t count toward your 1099 total. The card company or processor reports those separately.
- The income is still taxable. A contractor who earns $1,500 from you still owes tax on it, whether or not a form shows up in their mailbox. If you’re on the receiving end of fewer 1099s next year, your own records matter more, not less.
What I’d do this month
January is a terrible time to find out you don’t have a contractor’s tax ID. October is a great time.
- Pull a list of everyone you’ve paid for services in 2026. Your bookkeeping software can run this as a report by vendor.
- Flag anyone at or near $2,000. Remember that the last quarter of the year can push someone over the line.
- Collect a Form W-9 from each of them now. It’s a one-page form, and people are much quicker to return it while you’re still sending them work.
- Make W-9s part of onboarding. Going forward, get one before you cut a new contractor’s first check. Then this never becomes a January problem again.
A word of caution
This is the federal rule. Some states set their own reporting thresholds, so check your state’s requirements before you assume the $2,000 figure applies everywhere. And as always, this is general information, not advice for your specific situation.
If you want the full details, the IRS publishes them in its instructions for Forms 1099-MISC and 1099-NEC.
Not sure who on your vendor list needs a form this year? That’s exactly the kind of thing I sort out for clients. Grab a free 30-minute consultation and we’ll take a look together.