The 1099 threshold is now $2,000: what changes for the forms due February 1, 2027

For payments made in 2026, a business generally has to send a Form 1099-NEC or 1099-MISC only when it pays someone $2,000 or more during the year. The threshold had been $600 for decades. The change comes from the One Big Beautiful Bill Act and applies to the forms due in early 2027.

That means fewer forms for many small businesses. It does not mean you can stop tracking contractor payments, and a few payments still follow the old rules.

What changed

• The $2,000 threshold. Payments made after December 31, 2025 for services by non-employees (Form 1099-NEC) and most Form 1099-MISC categories, such as rent, now need a form only at $2,000 or more per payee for the year.
• Inflation adjustments. Starting in 2027, the $2,000 amount will be adjusted each year for inflation.
• Form 1099-K. Payment apps and card processors are back to issuing a 1099-K only when a seller has more than $20,000 and more than 200 transactions in a year. That threshold is not indexed for inflation.

What did not change

• Add up every payment to the same person. The threshold is the total paid to one payee over the calendar year. Four $600 payments to the same contractor total $2,400, which still requires a 1099-NEC.
• Royalties stay at $10. Royalty payments are still reportable on Form 1099-MISC at $10 or more.
• Attorney gross proceeds stay at $600. Under the IRS's draft 2026 instructions, gross proceeds of $600 or more paid to an attorney, such as a settlement payment, still go in Box 10 of Form 1099-MISC. Fees for the attorney's own services follow the $2,000 rule on Form 1099-NEC.
• Backup withholding. If a payee will not give you a taxpayer ID number, you generally have to withhold 24% and file a 1099 for that payment no matter the amount.
• Your contractors still owe the tax. The threshold decides whether you must send a form. It does not change whether the person you paid has to report the income.

The deadline is February 1, 2027

Form 1099-NEC is normally due to both the recipient and the IRS by January 31. In 2027, January 31 falls on a Sunday, so the deadline moves to Monday, February 1, 2027. There is no later date for electronic filing.

What Pennsylvania adds

• File with the state, too. If you are required to file a federal 1099-MISC or 1099-NEC for Pennsylvania-source income, the Pennsylvania Department of Revenue also requires a copy, filed through myPATH along with the annual withholding statement (REV-1667), by the same January deadline.
• Nonresident withholding. If you pay a contractor who lives outside Pennsylvania for work here, and the payments to that person will be more than $5,000 for the year, you generally must withhold Pennsylvania income tax at 3.07%.

What to do before year-end

1. Update your accounting software. Your software may still flag vendors at $600. Change the setting so your 1099 report reflects the $2,000 rule for 2026.
2. Keep collecting W-9s up front. Ask for a W-9 before the first payment, not in January. Waiting until a vendor crosses the threshold is how you end up chasing missing ID numbers on a deadline.
3. Total each vendor's 2026 payments now. A quick year-to-date report in November shows who is near $2,000 and keeps January from turning into a scramble.
4. Flag the exceptions. Note anyone you paid royalties, any attorney settlement payments, and anyone without a taxpayer ID on file.
5. Check out-of-state contractors. Confirm whether Pennsylvania nonresident withholding applies before the year's last payments go out.

Fewer forms is welcome. The businesses that get burned are the ones that stop keeping track because they assume they will not need to file.