Starting with payments made in 2026, you only have to send a contractor a 1099-NEC if you paid them $2,000 or more during the year. The old limit was $600, and it hadn't moved since 1954. That's less paperwork for most small businesses, but it doesn't change as much as people think.

• The threshold is $2,000, up from $600, for both Form 1099-NEC (contractors) and Form 1099-MISC (rent and other payments).
• It applies to payments made on or after January 1, 2026. The forms you file in early 2027 are the first ones under the new rule.
• It rises with inflation each year starting in 2027.

• The income is still taxable. If you're the contractor and a client paid you $1,500, you won't get a 1099, but you still report the $1,500.
• You still need a W-9. Collect one from every contractor before the first payment. You can't know in March who will cross $2,000 by December, and chasing forms in January is miserable.
• Missing tax ID? Backup withholding still applies. If a contractor won't give you a valid taxpayer ID and you pay them $2,000 or more, you're supposed to withhold 24% and send it to the IRS.
• The deadline is the same. 1099-NECs go to the contractor and the IRS by January 31. In 2027 that falls on a Sunday, so the due date is Monday, February 1.

• Anyone you paid by credit card, debit card, PayPal or a similar service. The payment company reports those, not you.
• Most corporations. Attorneys are the main exception; they get one even if incorporated.
• Anyone you paid less than $2,000 in total for the year.

You paid a web designer $1,800 by check, a cleaning company (an LLC taxed as a sole proprietor) $3,600 by bank transfer, and a photographer $2,500 through PayPal. Only the cleaning company gets a 1099-NEC from you. The designer is under the threshold, and PayPal handles the photographer.

1. Run a vendor report for the year so far and flag anyone at or near $2,000.
2. Make sure you have a W-9 on file for each of them.
3. Note how each one was paid; card and app payments come off your list.
4. If you file 10 or more information returns in total (1099s and W-2s combined), plan to e-file. Paper isn't allowed at that volume.

If your books are current, this takes about fifteen minutes. If they aren't, that's the real problem to solve before January. Our free book review will tell you where you stand, and our 1099 Preparation add-on handles the forms for you.

This article is general information, not tax or legal advice for your situation. Rules change, and details depend on your business; talk with a tax professional before acting.