New $2,000 1099-NEC Threshold (Starting 2026)

Currently, businesses must file Form 1099-NEC when they pay an independent contractor $600 or more in a year. Beginning in 2026, that threshold will rise to $2,000, and from 2027 onward, it will be adjusted annually for inflation. This update will reduce the number of forms most businesses need to file.

Note: Payments made through PayPal, Venmo, credit cards, or other third-party platforms do not require a 1099-NEC. These are reported on Form 1099-K instead.

Form 1099-K Thresholds Revert to $20,000 and 200 Transactions

Form 1099-K is used to report payments made through third-party platforms like PayPal, CashApp, eBay, Uber, and Airbnb. Thanks to the OBBBA, the lower thresholds that were set to kick in ($600, $2,500, or $5,000) are off the table for good. Starting in 2025, these platforms will only need to issue a Form 1099-K if:

• Total payments are over $20,000, and
• The recipient has more than 200 transactions during the year.

This update even applies retroactively to 2022, bringing back the familiar $20,000/200 rule businesses are used to.

State 1099-K Rules May Differ

Some states still require 1099-K filing at lower thresholds — often as low as $600. These include Maryland, Massachusetts, Vermont, Virginia, and others. It’s not yet clear whether state laws will be updated to match the new federal standard.

Form 1099-MISC

Form 1099-MISC, which reports items like rent, prizes, and legal settlements, will also follow the new $2,000 threshold starting in 2026.

Key Takeaways

• For 2025: Keep filing 1099-NEC forms for payments of $600 or more.
• Starting 2026: The filing threshold increases to $2,000, adjusted for inflation.
• 1099-K: Only applies to $20,000+ and 200+ transactions.
• Check your state rules — some still have lower reporting thresholds.