The $600 rule is gone
For decades, businesses had to send a Form 1099 to any contractor they paid $600 or more. Starting with payments made in 2026, that threshold is generally $2,000 (IRS). The change comes from the 2025 federal tax law and will show up in the forms you file in January 2027.
What changes
Payments to independent contractors for services (Form 1099-NEC) now need a form at $2,000 or more. Rents, prizes and awards, medical payments and other income reported on Form 1099-MISC move to $2,000 too. The IRS says the threshold may be adjusted for inflation starting in 2027.
Fewer forms doesn’t mean less income to report.

What stays the same
The higher threshold doesn’t apply to every payment. Keep these rules in mind.
Royalties and attorney payments
Royalties are still reported at $10 or more. Gross proceeds paid to attorneys (Form 1099-MISC, box 10) stay at $600 (NATP).
Backup withholding
If you withheld 24% because a contractor didn’t give you a valid tax ID, you must file a 1099 no matter the amount.
Deadlines
Form 1099-NEC is due to the IRS and to the contractor by January 31. In 2027 that date falls on a Sunday, so the deadline moves to Monday, February 1.
E-filing
If you file 10 or more information returns in total, you must file them electronically.
What about payment apps?
The law also restored the old Form 1099-K threshold. Payment platforms report only when you receive more than $20,000 and more than 200 transactions in a year (IRS). All business income is still taxable, whether or not you get a form.
How to get ready now
A cleaner year-end starts with organized vendor records. Ask us to review your contractor list before the holidays.
This article is for general information only and isn’t tax advice for your specific situation.
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