New 1099 Filing Rules

If your business pays independent contractors (non-employees) for services, you are required to file IRS Form 1099-NEC if the total payments exceed a specific threshold. For decades, this threshold has been $600 or more in a calendar year. 

This threshold is about to change.

Beginning with payments made in 2026, you file a Form 1099-NEC if you pay an independent contractor $2,000 or more during the year. In addition, starting in 2027, this amount will be adjusted annually for inflation in increments of $100.

 This new update means many businesses will have fewer 1099-NEC filing obligations.

Changes to Form 1099-K Thresholds

The new tax law 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-K forms when payments meet specific criteria. For example, if you pay a contractor via PayPal, you (the contractor’s client) do not file a 1099-K; PayPal does, only 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, effective retroactively to 2022, 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.

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.