1099 threshold for 2026: the new $2,000 rule
If your business pays a contractor or a landlord in 2026, the federal line for sending a Form 1099 is now $2,000 for the year, up from $600. Here is the rule as the law states it, with worked examples and the parts that did not change.
The short answer
For payments made after December 31, 2025, a business generally files a Form 1099 for a payee only when it pays that payee $2,000 or more during the calendar year, for services (Form 1099-NEC) or for rent and similar income (Form 1099-MISC). Below $2,000 for the whole year, the federal rule does not require the form. Payments made in 2025 still used the old $600 line.
What the law says now
The basic rule is in 26 U.S.C. §6041(a). It applies to anyone "engaged in a trade or business" who pays another person rent, compensation, fees and similar income "of $2,000 or more in any calendar year". The heading of that subsection used to read "of $600 or more"; the 2025 law (Pub. L. 119-21, §70433) changed it to "Payments exceeding threshold" and replaced "$600" with "$2,000".
Payments for services, the ones reported on Form 1099-NEC, are covered by 26 U.S.C. §6041A(a). It now requires a return when the year's payments for services to one person "equals or exceeds the dollar amount in effect for such calendar year under section 6041(a)". In other words, the services rule follows the same $2,000 figure, and it will follow it as the figure changes.
The start date comes from §70433(f) of the 2025 law, which the U.S. Code prints as a note under 26 U.S.C. §3406: the amendments "shall apply with respect to payments made after December 31, 2025." So the date that matters is when you paid, not when the work was done or the invoice was dated.
Worked examples (2026 payments)
| Payee | Paid in 2026 | Federal 1099 under the $2,000 line? |
|---|---|---|
| Freelance designer (sole proprietor), paid by check | $1,950 | No form required at that total. One more $50 invoice in 2026 would cross the line. |
| Bookkeeper (individual), paid by ACH | $2,000.00 exactly | Yes: the services rule says "equals or exceeds". |
| Office landlord (individual), paid monthly by check | $2,400 | Yes: rent is covered by §6041(a). |
| Cleaner paid $500 in March 2026 and $1,600 in November 2026 | $2,100 | Yes: the line is the calendar-year total per payee, not per payment. |
| Contractor paid $1,200 in December 2025 and $1,000 in January 2026 | $1,000 in 2026 | Not for 2026. The 2025 payment belongs to 2025, which used $600. |
These examples assume the payee is not a corporation and was paid by check, bank transfer or cash. Card payments, payments through some payment apps, and payments to most corporations follow different rules; see who doesn't get a 1099.
Why the IRS regulations still say $600
The Treasury regulation that implements this section, 26 CFR 1.6041-1, is still titled "Return of information as to payments of $600 or more" in the eCFR text dated October 6, 2026, and its examples use $600. That is not a contradiction you need to resolve: regulations are written to carry out the statute, and when Congress changes a dollar amount in the statute, the statute controls even before the regulations are rewritten. Expect some IRS pages, form instructions, software screens and older articles to show $600 for a while. Check the date on anything you read, and whether it is talking about 2025 payments or 2026 payments.
From 2027 the amount moves with inflation
A new 26 U.S.C. §6041(h) says that for "any calendar year after 2026" the $2,000 is increased by a cost-of-living adjustment that uses 2025 as the base year, rounded to the nearest $100. So the 2027 figure is not fixed in the law; the IRS will publish it. We could not open irs.gov while writing this page, so we have not seen a 2027 figure and do not quote one. Until it is published, plan with $2,000 and check again before your 2027 year-end.
What did not change
- Royalties are reported from $10 a year, under a separate rule (26 U.S.C. §6050N(a)).
- Card and payment-network payments are reported by the processor, not by you, under 26 U.S.C. §6050W. The 2025 law set that processor threshold at more than $20,000 and more than 200 transactions for third party networks (§6050W(e)), but that threshold is about the processor's own form, not yours.
- Backup withholding uses the same line: under 26 U.S.C. §3406(b)(6), a payment counts as reportable once the year's total to the payee reaches the amount in effect under §6041(a). If a payee above the line has not given you a taxpayer identification number, ask for a Form W-9 before you pay again.
- Penalties still apply. 26 U.S.C. §6721(a) sets $250 per late or incorrect return, before the inflation adjustment in §6721(f), with lower amounts if you correct within 30 days or by August 1.
- State rules are separate. Some states set their own reporting rules, and we have not verified any state's 2026 figure, so check yours.
How to apply it to your own books
- Export every 2026 payment from your bank accounts (and your accounting software, if you use one).
- Total the year by payee. Merge the different spellings of the same person, and count checks that have no name in the description.
- Set aside card payments and payments to corporations (with the attorney and medical exceptions), goods and employee wages.
- Flag every remaining payee at $2,000 or more, and watch anyone between $1,500 and $1,999 who may get another payment before December 31.
- Collect a W-9 from each flagged payee now, not in January.
The free Year-End Vendor Check does steps 2 to 4 from a bank, card, QuickBooks or Xero export, in your browser, and shows the rule behind each result. A spreadsheet pivot table works too; the recurring charges guide shows the export and grouping steps.