1099 Threshold 2026: The $600 Rule Is Now $2,000

The 1099 threshold for 2026 is $2,000. For payments made in 2026, reported on forms filed in early 2027, the general reporting threshold for Forms 1099-NEC and 1099-MISC rose from $600 to $2,000, and the same change applies to the backup withholding threshold. Several items did not move, and the W-9 form itself hasn't been finalized with the new number. Bookkeepers and AP teams should update their vendor rules now but keep collecting W-9s from every vendor up front.

General information, not tax or legal advice.

The short answer

• What changed. For payments made in 2026 and later, the general 1099-NEC and 1099-MISC reporting threshold (and backup withholding threshold) is $2,000, up from $600, per the IRS Instructions for Forms 1099-MISC and 1099-NEC.
• What's next. The $2,000 threshold is indexed for inflation starting in 2027. The IRS hasn't published the 2027 amount yet.
• What didn't change. Royalties stay at $10, attorney gross proceeds stay at $600, and payments with backup withholding are reportable at any amount.
• What we recommend. Keep requesting a W-9 from every U.S. vendor before the first payment. At onboarding you can't know who will cross $2,000.

W-9 collection belongs at the start of the vendor relationship. Our vendor onboarding checklist walks through that process step by step. This post covers the threshold itself.

Why this matters in a real workflow

A higher threshold sounds like less work, and for many small vendors it is. The risk is in how teams react: they stop asking small vendors for W-9s, set a single $2,000 rule in the accounting system, or copy $600 from an old IRS page. Each shortcut can leave you without a TIN in January, or filing on the wrong rule.

The sources are also only partly final. The statute and the 1099 instructions are updated, the regulations are still proposed, and the W-9 in circulation still shows $600. Knowing which document says what saves arguments.

What the IRS says

What changed, and when

OBBBA section 70433 raised the section 6041 threshold from $600 to $2,000 for payments after December 31, 2025, and added section 6041(h) to index it for inflation after 2026. The section 6041A and backup withholding thresholds now cross-reference that amount, according to the preamble to the proposed regulations in the Federal Register.

In practice, this means 2026 payments, reported on returns filed in early 2027. IRS Publication 1099 (2026) says the $2,000 threshold will be adjusted for inflation beginning in 2027, and that the previous threshold was $600.

Indexing: "may" or "will"?

The 1099-MISC/NEC instructions say the threshold "may be adjusted for inflation beginning in calendar year 2027."

Publication 1099 (2026) says it "will be adjusted."

Either way, the threshold is indexed for inflation starting in 2027, and the IRS hasn't published the 2027 amount yet. We won't guess at a 2027 figure.

Proposed regulations are not final

Proposed Treasury regulations published April 17, 2026 would set the threshold at $2,000 for 2026 payments and at $2,000 plus inflation for payments after 2026. They are still proposed. A public hearing was held July 17, 2026.

The $2,000 figure for 2026 payments comes from the statute itself, so it doesn't depend on the regulations being finalized.

Which forms and boxes moved to $2,000

File 1099-NEC for each person you paid at least $2,000 in the course of your business for services by a non-employee, including parts and materials, or for payments to an attorney.

Attorneys' fees of $2,000 or more paid in your business go in 1099-NEC box 1a, and "attorney" includes law firms.

For 2026, most 1099-MISC boxes use the $2,000 threshold, including rents, prizes and awards, other income and medical payments.

Rent payments of $2,000 or more go in 1099-MISC box 1. Medical and health care payments of $2,000 or more go in box 6.

What did not move

Some thresholds did not change under OBBBA:

• Royalties and substitute payments stay at $10.
• Attorney gross proceeds stay at $600. These are payments to an attorney that aren't for the attorney's own services, such as settlement funds, reported in 1099-MISC box 10.
• Cash paid for fish bought for resale stays at $600.
• Direct sales stay at $5,000 or more.
• Payments with backup withholding are reportable at any amount.

On that last point, the instructions say that if you backup withhold from a vendor, you must file a 1099-NEC for them regardless of the amount paid, even if it's under $2,000.

New boxes and new form revisions

The December 2026 1099-NEC and 1099-MISC add boxes for cash tips, tipped occupation codes and overtime compensation, under OBBBA sections 70201 and 70202.

The IRS says to use the December 2026 revisions of Forms 1099-MISC and 1099-NEC to file 2026 information in early 2027, and to keep using them until superseded.

Form 1099-K is a separate threshold

OBBBA restored the old 1099-K threshold. Payment apps and marketplaces report only when a payee has over $20,000 in payments and over 200 transactions in a year (IRS news release IR-2025-107).

Payments you make by credit card or through third-party payment networks are reported by the payment settlement entity on 1099-K. You don't report them on 1099-NEC or MISC.

How the threshold interacts with backup withholding

The 1099-MISC/NEC instructions describe the increase as applying to the minimum threshold for reporting certain payments "and/or" for performing backup withholding on those payments.

The June 2026 draft W-9 requester instructions say OBBBA section 70433 raised the threshold to $2,000 for many reportable payments, and for backup withholding, for payments made after 2025, with inflation indexing after 2026. That is draft text.

The core obligation is unchanged. The IRS says you must withhold 24% from reportable nonemployee compensation if the payee hasn't provided a TIN as required, or if the IRS notifies you the TIN is incorrect and the payee doesn't certify it as the notice requires (IRS: forms and taxes for independent contractors).

You must also make an initial request for the payee's TIN when the account is opened or the transaction occurs. If you don't get it, backup withholding begins, according to IRS Publication 1281.

The sources we checked don't spell out how the threshold applies when early payments to a new vendor are small but later ones push the year over $2,000. Work that case through with your tax adviser rather than assuming no withholding is needed.

What did not change: the W-9 itself

As of September 2026, the current final Form W-9 is the March 2024 revision, and the IRS About page lists no recent developments.

The exemption chart on that current form still refers to payments over $600. The June 2026 draft updates it to $2,000. Don't quote the $600 line as current law.

The IRS posted the draft W-9 on May 4, 2026, and draft requester instructions on May 15, 2026 (IRS draft forms). They are drafts, and the IRS says not to file draft forms or rely on draft instructions.

Some IRS pages still say $600

Several IRS pages still show the old $600 / 1099-MISC rule for contractor payments, including the Charities 1099 page, Pub 1828 (2015) and a tip in Pub 525 (2025). For 2026 payments, the current rule is in the December 2026 1099-MISC/NEC instructions.

The backup withholding guide, Pub 1281, is still the December 2023 revision. It doesn't mention OBBBA's $2,000 threshold, so use it for B-notice procedure, not for thresholds.

The IRS page on reporting payments to independent contractors now describes reportable payments totaling "the threshold amount or greater" rather than a fixed dollar figure.

Before and after: TY2025 vs TY2026

Recommended workflow

These are our recommendations, not IRS rules.

1. Collect a W-9 from every U.S. vendor before the first payment (AP lead). A vendor billing $300 a month from January passes $2,000 in July. You can't know at onboarding who will cross the line, and special thresholds and backup withholding apply regardless. For wording, see how to request a W-9 from a vendor.
2. Record the tax classification and special categories (bookkeeper). Tag attorneys and law firms, medical providers, royalty payees and anyone subject to backup withholding.
3. Update 1099 settings for 2026 only (bookkeeper or system admin). Set the general 2026 threshold to $2,000, keep the special thresholds in place, and don't enter a 2027 value until the IRS publishes one.
4. Separate card and payment-app payments (bookkeeper). Code them so they don't inflate NEC or MISC totals.
5. Watch for the 2027 amount and the final W-9 (owner, monthly through early 2027). Check the IRS inflation-adjustment page and the About Form W-9 page.
6. Run the year-end sweep (bookkeeper, October–December). Our year-end W-9 checklist covers the month-by-month plan and the 2027 due dates.

Exception path. A vendor pushes back: "I'll never bill you $2,000, so I don't need to send a W-9." Explain that you ask every vendor because totals aren't known in advance. If they still refuse, escalate and talk with your tax adviser about backup withholding before paying them.

Example scenario

Example scenario: Harbor Row Books, a made-up three-person bookkeeping firm, runs AP for a local property manager. In March 2026, a new handyman vendor, a sole proprietor, sends a first invoice for $450. An "only if over $2,000" habit would skip the W-9, just as an old "only if over $600" habit would have. The firm's policy is a W-9 before first payment, so the vendor completes one in March (TIN shown here as XXX-XX-XXXX).

By November, the handyman has billed $2,350 for services. With the W-9 on file since March, year-end work is just confirming the total and preparing a 1099-NEC. The same review catches a royalty payee paid $40 a year: well under $2,000, but royalties report at $10, so it stays on the list.

Common mistakes

• Treating $2,000 as the only number. Royalties, attorney gross proceeds, fish purchases and backup-withheld payments follow different rules.
• Assuming the 2027 threshold is also $2,000. It is indexed, and the IRS hasn't published the 2027 amount.
• Quoting the W-9's $600 chart line as current law. The final form hasn't caught up; only the draft shows $2,000.
• Citing an old IRS page. Some IRS pages still say $600. Use the December 2026 1099-MISC/NEC instructions.
• Mixing up 1099-K and 1099-NEC. The $20,000 / 200-transaction test is the platform's rule, and card payments you make go on the platform's 1099-K, not your NEC.
• Collecting W-9s as plain email attachments. Standard email attachments are usually a poor channel for documents containing TINs: they stay in mailboxes and are easy to forward to the wrong person. Our secure W-9 collection guide explains safer options.

Checklist

• ☐ Set the 2026 general threshold to $2,000; leave 2027 blank until published
• ☐ Keep special thresholds: royalties $10, attorney gross proceeds $600, fish $600, backup-withheld payments at any amount
• ☐ Keep requesting a W-9 from every U.S. vendor before the first payment
• ☐ Tag attorneys, law firms, medical providers and royalty payees in the vendor master
• ☐ Code card and payment-app payments separately (1099-K)
• ☐ Brief staff that the current W-9's $600 chart line is outdated for 2026 payments
• ☐ Plan to file on the December 2026 1099-NEC and 1099-MISC revisions
• ☐ Check monthly for the final W-9 and the 2027 amount; schedule the year-end W-9 sweep

How W9Vault supports this workflow

W9Vault gives each vendor a secure upload link that expires after 7 days. Files are encrypted in the vendor's browser before upload, and our server never receives the plaintext file. One request can ask for several documents at once, such as a W-9 plus an ACH authorization form (PDF, JPG or PNG, up to 20 MB). Your dashboard shows whether each request is sent or completed. Uploaded files are deleted automatically 30 days after upload for completed requests, so move the W-9 into your own records promptly.

W9Vault is designed to support a secure collection workflow; the customer remains responsible for their own tax, recordkeeping and security obligations.

Frequently Asked Questions

What is the 1099 threshold for 2026?

For payments made in 2026, reported in early 2027, the general 1099-NEC and 1099-MISC threshold is $2,000, up from $600. The same increase applies to the backup withholding threshold.

What will the threshold be for 2027?

The $2,000 threshold is indexed for inflation starting in 2027. The IRS has not published the 2027 amount yet.

The W-9 still says $600. Is it wrong?

The current final W-9 is the March 2024 revision, and its exemption chart still refers to payments over $600. A June 2026 draft updates that line to $2,000, but it is only a draft. Keep using the current form until a final revision is released.

Should I stop collecting W-9s from vendors I expect to pay under $2,000?

We recommend against it. You can’t know at onboarding who will cross $2,000, some payments have lower thresholds, and backup withholding rules still apply when a vendor hasn’t provided a TIN.

Official resources

• Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026)
• Publication 1099 (2026), General Instructions for Certain Information Returns
• Proposed rule: Increase in Threshold for Requiring Information Reporting (91 FR 20599)
• IR-2025-107, FAQs on the Form 1099-K threshold
• Form W-9 (Rev. March 2024)
• About Form W-9
• Draft Form W-9 (Rev. June 2026)
• Draft Instructions for the Requester of Form W-9 (Rev. June 2026)
• IRS draft tax forms (W-9)
• Forms and associated taxes for independent contractors
• Reporting payments to independent contractors
• Publication 1281, Backup Withholding for Missing and Incorrect Name/TIN(s)
• Charities: Information returns (Forms 1099)
• Publication 1828
• Publication 525 (2025)