2026 Higher Threshold for Filing Forms 1099-NEC and 1099-MISC

The Old Rule

Businesses have had to file Form 1099-NEC anytime they paid a contractor or freelancer $600 or more in a year. That’s a pretty low threshold in the current economic environment, so many businesses ended up filing 1099s for lots of small payments.

The New Rule

Beginning with tax year 2026, the new threshold for 1099-NEC and 1099-MISC will be increased to $2,000 and will be indexed for inflation starting in 2027. The upside for your business is not having to track down and file for low dollar amounts of 1099s.

What About State Rules?

Whenever the federal government changes a tax law, each state gets to decide whether they want to follow it. For this change, states generally fall into three groups:

• Automatic followers: Some statues automatically adopt federal changes so their threshold will rise to $2,000 too.
• Sticking with $600: Other states have the $600 threshold written into their own state law, so it stays at $600 until the legislature changes it.
• Doing their own thing: Some states set their own threshold at a different amount. Additionally, some states may choose to increase the threshold to $2,000 in 2026 but not follow the inflationary increases in future years.

Beyond the thresholds, it’s also important to know when a state requires filing of the forms. Some states only require filing the forms if there was state tax withheld. States are continually issuing updated filing specifications, and the changes under OBBBA have triggered a wave of state changes for the 2026 tax year.

What Your Business Should Do Before Filing Season

• Check the filing thresholds for Form 1099-NEC for the states in which your company pays contractors.
• If any of your payments are above the threshold, double-check whether that state also requires state tax to have been withheld before a filing is required.

If you have questions about your Form 1099-NEC and 1099-MISC filing requirements, Cray Kaiser is happy to help. You can reach us at 630.953.4900 or by filling out this form.