The 1099-NEC threshold just doubled—what it means for you

Small businesses that pay independent contractors have a new reporting threshold for 2026: the One Big Beautiful Bill (OBBBA) raised the Form 1099-NEC filing requirement from $600 to $2,000. That means fewer 1099s to file—but it does not mean your recordkeeping can relax.

Strategy: Review your contractor payments for 2026 now, before year-end, to identify which vendors will still require a 1099-NEC. Catching issues before December 31 gives you time to collect missing W-9 information and avoid scrambling in January.

Here’s the whole story: Under prior law, businesses were required to file Form 1099-NEC for each independent contractor paid $600 or more during the year. That threshold had been unchanged since 1954. The OBBBA raised it to $2,000 for 2026, with annual inflation indexing beginning in 2027.

The practical effect. Contractors paid between $600 and $1,999 during 2026 no Business longer require a 1099-NEC. For many small businesses that engage occasional freelancers for modest amounts, this significantly reduces the filing burden. But the threshold change does not reduce the contractor’s obligation to report and pay tax on that income—it only removes your reporting obligation.

Backup withholding still applies. If a contractor fails to provide a valid Form W-9 with their taxpayer identification number, you are still required to withhold 24% backup withholding on payments, regardless of the $2,000 threshold. The backup withholding rules were not changed by the OBBBA.

Tip: If you have engaged new contractors during 2026 and have not yet collected Form W-9, do so before year-end. A missing TIN creates a backup withholding obligation and can trigger IRS penalties. Even for contractors below the $2,000 threshold, keeping a W-9 on file documents their independent contractor status for any future audit.