Filing tax forms is never fun—but it’s important to stay ahead of changes that can reduce your reporting burden.
If your business pays independent contractors (non-employees) for services, you are required to file IRS Form 1099-NEC if total payments exceed a specific threshold. For decades, this threshold has been $600 or more in a calendar year. Failing to file can result in substantial penalties.
That threshold is about to change.
Thanks to the OBBBA, beginning with payments made in 2026, you file Form 1099-NEC if you pay an independent contractor $2,000 or more during the year. Starting in 2027, this amount will be adjusted annually for inflation in $100 increments.
This welcome update means many businesses will have fewer 1099-NEC filing obligations.
Changes to Form 1099-K Thresholds
The OBBBA also revised the filing rules for Form 1099-K, which is used by third-party settlement organizations (TPSOs) such as PayPal, Uber, and eBay. These platforms are responsible for issuing 1099-Ks when payments meet certain criteria. For example, if you pay a contractor via PayPal, you (the contractor’s client) do not file a 1099-K—PayPal does, if the 1099-K filing threshold is met.
Previously, the 1099-K threshold was set to drop to $5,000 in 2025 and then to $600 in 2026—potentially triggering billions of filings. However, the OBBBA reverses this change.
Effective retroactively to 2022 (yep, three years ago), TPSOs need to file Form 1099-K if both of the following apply:
• The recipient is paid more than $20,000.
• The recipient has more than 200 transactions during the year.
This rollback to the 2022 threshold means far fewer Forms 1099-K will be issued. Both TPSOs and recipients can breathe a sigh of relief.
A Final Reminder
Regardless of whether a 1099 form is issued, all taxpayers must report all taxable income on their tax returns—even if it’s not reported to the IRS by a third party.
