If you pay freelancers, contractors, or vendors, this is the first January in decades where your habits need rebuilding. Everyone you paid between $600 and $1,999 in 2026 — the designer who did two small jobs, the cleaner who came monthly — no longer needs a federal 1099 from you. But the change is narrower than the headlines: it moved one number in the reporting rules, and left the rest of the system — the deadlines, the W-9 habit, the odd categories that still file at $10 or $600 — exactly where it was.
The rule, old vs. new, in one table
| What you paid for | Form | Payments in 2025 | Payments in 2026 |
|---|---|---|---|
| Contractor and freelancer services | 1099-NEC | File at $600 | File at $2,000 |
| Attorneys’ fees for their services | 1099-NEC, box 1a | File at $600 | File at $2,000 |
| Rent, prizes & awards, other income, medical & health care payments, crop insurance proceeds | 1099-MISC | File at $600 | File at $2,000 |
| Royalties | 1099-MISC, box 2 | File at $10 | File at $10 — unchanged |
| Gross proceeds paid to an attorney (settlement money, not their fees) | 1099-MISC, box 10 | File at $600 | File at $600 — unchanged |
| Anyone you withheld federal tax from under the backup withholding rules | 1099-NEC or 1099-MISC | File at any amount | File at any amount — unchanged |
The trigger is always the total paid to one person across the whole calendar year, from your business — not per invoice and not per job. Six $400 payments to the same contractor are $2,400 of payments, and that person gets a 1099-NEC. The forms you filed in early 2026, for 2025 payments, correctly used $600: the new number starts with payments made on or after January 1, 2026.
The misunderstanding to avoid: “no 1099” does not mean “no tax”
This is the part of the change that can genuinely hurt someone. A 1099 is a report — a copy to the IRS so it can match income against returns. It was never the tax bill, and removing the report does not remove the income.
If you received the money: every dollar you earned is still taxable income and still goes on your return, form or no form. A client who paid you $1,200 in 2026 will not send you a 1099-NEC — the $1,200 is still yours to report. The IRS requires a self-employed person to file a return once net self-employment earnings reach $400, far below the new $2,000 reporting line, and it uses the forms it does receive to check whether recipients reported properly. Expecting “no form, no tax” to survive an audit is a bad bet.
If you paid the money: your side barely changes. You still record what you paid each contractor, the same way you did before — the form was never your receipt, and your books still need the totals, not least because the $2,000 line is a total you can only know if you kept count.
The whole job now is keeping the totals straight. Our 1099 Payer Kit for Tax Year 2026 is built for exactly that: a vendor log with a $2,000 flag column so you see who crosses the line as the year goes, a W-9 chase tracker, a plain-words helper that sorts each payment onto the NEC or the MISC, and a deadline calendar running to February 1, 2027. Get the kit on Etsy →
What payers still have to do
- Get the W-9 before there is a problem. You need each contractor’s taxpayer identification number to file, and January is the worst month to ask for it. Collect Form W-9 when you first hire someone. If a payee who should be reported will not furnish a TIN, the backup withholding rules say you withhold 24% from their pay — and if you withheld anything at all, you file the form whatever the year’s total came to.
- File and furnish by February 1, 2027. For 2026 payments, the 1099-NEC is due to the IRS and the contractor’s copy is due the same day: Monday, February 1, 2027. The usual date is January 31, but January 31, 2027 is a Sunday, and a deadline that lands on a weekend moves to the next business day. Form 1099-MISC runs later: recipient copies February 1, 2027, and the IRS copy March 1, 2027 on paper or March 31, 2027 filed electronically.
- Business payments only. The whole 1099 system covers payments made in the course of a trade or business. Paying someone to paint your own house, as a homeowner, was never in it — at $600, at $2,000, at any amount.
- Corporations are still mostly out. Payments to a corporation — including an LLC taxed as a corporation — generally need no form at all. The standing exceptions include attorneys’ fees and medical and health care payments, which are reported even when the payee is incorporated.
- Paid by card or payment app? Then it is not your 1099-NEC. Money that moves through a credit card or a third-party payment platform is reported by that platform under the Form 1099-K rules, not by you on a 1099-NEC — filing both would double-report the same income.
- Check your state before you relax. The $2,000 figure is the federal threshold. Many states run their own 1099 filing with their own numbers and deadlines — several still use $600, and a few go lower. The federal change did not move theirs.
Do not mix this up with Form 1099-K
The same law also reset the Form 1099-K threshold back to more than $20,000 and more than 200 transactions — and whether you will actually get one, state exceptions included, has its own page. That is a different form, sent by marketplaces and payment platforms to the people they pay — Etsy and Shopify sellers, for example — and it has nothing to do with the forms your business sends its contractors. Two thresholds changed in the same law, in opposite directions of confusion: if money you received is the question, it is the 1099-K rule; if money you paid out for services is the question, it is the $2,000 rule on this page.
After 2026: the number starts moving again, slowly
The $600 figure sat frozen from 1954 to 2025 because nothing in the law adjusted it. The new law fixes that: section 6041(h) adjusts the $2,000 for inflation for calendar years after 2026, using 2025 as the base year, and rounds any increase to the nearest $100. In plain terms, expect the threshold to creep upward in $100 steps — some years it will not move at all — rather than sit still for another seventy years. Check the current figure each January before you file; this page covers the 2026 number.
The honest limit
This page is general information, not tax advice — the same stance as every calculator on this site. The edges of this system have teeth: fishing boat proceeds are reportable at any amount, sales of $5,000 or more of consumer products for resale carry their own rule, late-filing penalties still exist, and attorney payments split two ways (their fees at $2,000 on the NEC; gross proceeds at $600 on the MISC) in a way that trips up careful people. If your year mixes categories, a tax professional earns their fee. Our sources, for the record: Internal Revenue Code §6041 as amended by Public Law 119-21, §70433; the IRS Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026); the IRS pages on backup withholding and the Self-Employed Individuals Tax Center.
January doesn’t have to be a scramble
Two ways to be ready for February 1, 2027. Doing it yourself: the TY2026 1099 Payer Kit — vendor log with the $2,000 flag, W-9 tracker, NEC-or-MISC decision helper, and the month-by-month deadline calendar, in ten printable pages. Or hand over the whole year: Ren Studio’s bookkeeping service sorts every contractor payment as it happens and hands you the totals in January, so 1099 season is a chore of minutes instead of a weekend.
More guides & tools
- Free tax calculators & tools — the hub
- Will you get a 1099-K for 2026? The $20,000-and-200 rule and the state exceptions
- Self-employment tax calculator — the 15.3%, shown
- No tax on tips calculator — the $25,000 deduction
- No tax on overtime calculator — only the premium half counts
- Etsy fee calculator — what a sale actually leaves you
- Bookkeeping done for you — one clear page a month