If you pay anyone who isn’t an employee, this affects you and it changed recently enough that most owners haven’t heard.
The old number was $600. It’s now $2,000.
If you paid a contractor $600 or more over the year in the course of your business, you had to send them a 1099 and file a copy with the IRS. That $600 figure had stood for a very long time.
For payments you make during 2026, the threshold is $2,000. The IRS instructions put it this way: for tax years beginning after 2025, the minimum threshold for reporting these payments went up to $2,000, and it may be adjusted for inflation starting in 2027.
So the subcontractor you paid $900 this year is below the line now. Last year they wouldn’t have been.
Do not confuse this with the Venmo and PayPal rule
This is where people get tangled, so it’s worth separating clearly.
The change above covers Form 1099-NEC and 1099-MISC, which are the forms you send when you pay someone directly. Think a check, cash, or a bank transfer to a subcontractor.
There’s a completely different form, the 1099-K, that payment apps and card processors send. That one has its own threshold, and under the same law it went back to more than $20,000 and more than 200 transactions.
Different form, different number, different person filing it. If you’ve been reading about “the $600 rule” and getting confused, this is why. There were two different rules being argued about at the same time.
What a higher threshold does not change
A smaller filing requirement is not a smaller bookkeeping requirement. Two things stay exactly as important:
You still need a signed W-9 before the first payment goes out. Chasing a tax ID number in January from someone who finished a job in June, and may not answer the phone anymore, is a hassle. Get it up front, every time, no exceptions.
You still need to know what you paid each person. The threshold only helps you if you can prove which side of it you’re on. If your contractor payments are scattered across a checking account, a card, and an app, you can’t answer that question in January without a lot of digging.
And the payment is still a deductible business expense whether or not a form gets filed. Filing the 1099 is a reporting duty on its own track.
Where my part ends
My part here is the reporting threshold and keeping records that make January easy. Whether a specific payment or worker is reportable is a question for your tax preparer, especially anything involving worker classification, which is its own subject and gets people in real trouble.
What I can do is make sure that when they ask, the answer is already in your books.
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