New 1099 rules for 2026: who you actually need to send a form to now

If 1099 season has ever made you want to crawl under your desk, combing through a year of contractor payments, wondering "wait, did I pay them $550 or $650?" — 2026 just handed you a little relief.

Thanks to tax law changes from the One Big Beautiful Bill Act (OBBBA), the reporting thresholds for some of the most common small-business forms just moved. Here's what changed, who it actually affects, and a simple way to think about it so you're not stuck guessing in January.

What changed

1099-NEC and 1099-MISC: the threshold jumped from $600 to $2,000. For years, the rule of thumb was simple (if a little annoying): pay any contractor or non-employee $600 or more in a year, and you owe them — and the IRS — a form. Starting in 2026, that bar moves up to $2,000, and it's set to adjust for inflation in future years.

1099-K: the threshold reverts to $20,000 and 200 transactions. If you've ever paid contractors or vendors through PayPal, Venmo, or similar platforms, you may remember the back-and-forth over how low that reporting bar would go. As of 2026, it's reverting to the higher $20,000-and-200-transactions threshold — a meaningful change from the lower limits that had been phased in.

What this actually means for you

In plain terms: fewer of your smaller contractor payments will require a 1099-NEC or 1099-MISC than in past years, and fewer of your platform-based payments will trigger a 1099-K from the payment processor's side.

That's good news if you've ever spent an afternoon chasing down a W-9 from a contractor you paid $650 for a one-off logo design. But — and this is the part worth sitting with for a second — "you might not have to file as many forms" is not the same as "you don't need to track these payments anymore." More on that below.

A simple checklist for 2026

Use this as a quick gut-check when you're trying to figure out whether someone needs a form from you this year:

Did you pay an individual or unincorporated business $2,000 or more for services in 2026? If yes, and they're not your employee, they likely need a 1099-NEC. (Note: payments to most corporations are still generally exempt — but LLCs can be tricky, so when in doubt, get that W-9 up front.)

Did you make rent, royalty, or certain other reportable payments of $2,000 or more? That's where the 1099-MISC comes in — a different form for a different category of payment, and one that's easy to mix up with the NEC.

Did a contractor receive $20,000 or more across 200+ transactions through a payment app or platform? If so, the platform itself (not you) is generally responsible for issuing a 1099-K — but it's still worth knowing this is happening, since it affects how that contractor's income gets reported.

Are you under the new thresholds for someone you paid this year? Then you likely don't need to issue a form for that payment in 2026 — but don't stop tracking it (see below).

Why you should keep tracking everything anyway

Here's the thing about higher thresholds: they change your filing obligations, not your recordkeeping habits. A few reasons to keep a clean log of every contractor payment, regardless of size:

You won't always know in January what you paid someone back in March — and totals creep up faster than you'd think when work is spread across several smaller projects. Good records mean you're never caught off guard wondering whether you crossed a threshold. They also make your own tax filing smoother, since contractor costs are a deduction you'll want to substantiate either way. And if a contractor ever asks for documentation of what you paid them, you'll have it ready instead of reconstructing it from bank statements.

In short: the new rules mean less paperwork for smaller payments, not less responsibility for knowing what you paid and to whom.

The bottom line

The 2026 threshold changes are a genuinely welcome simplification — fewer forms for the smallest, one-off payments means less January scrambling for a lot of small business owners. But "simpler" isn't the same as "set it and forget it." The businesses that come out ahead this tax season will be the ones that keep clean records all year, so that whether a payment crosses the new $2,000 line or not, they already know the answer.

If you're not sure whether a specific contractor or payment falls under the new rules — or you just want one less thing to track in your head — that's exactly the kind of question we're happy to help sort through before it becomes a January fire drill.

Sources: Small Business Tax Changes for 2026 — 1800Accountant | OBBBA and your 2026 taxes — Expensify

This post is for general informational purposes and isn't a substitute for personalized tax advice — your specific situation may call for a closer look from a tax professional.