The 1099-NEC Floor Moves to $2,000 for 2026 Payments
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If you pay contractors in Clark County, the old $600 rule is no longer the line for most federal 1099s.
The change comes from the One Big Beautiful Bill Act, the official name of Public Law 119-21 signed July 4, 2025. People also call it OBBBA r OB3. For payments you make in calendar year 2026, the usual reporting floor on Form 1099-NEC and on several Form 1099-MISC boxes is $2,000. You file those 2026 forms in early 2027.
This post covers who still files, which boxes kept a different floor, and what to do before December 31.
A Vancouver shop that pays a Camas handyman $1,200 total payments in 2026 generally does not issue a 1099-NEC for that payee. The same shop that pays that handyman $2,400 still does. The handyman still reports the $1,200 as income. The form is a payer duty. It is not what makes the income taxable.
1. What changed, and when
The IRS now states the rule this way.
- For payments made before 2026, the reporting threshold is $600.
- For payments made in 2026, the reporting threshold is $2,000.
- For payments made after 2026, use Publication 1099 for the inflation-adjusted amount. Indexing starts with calendar year 2027.
The statute amended Internal Revenue Code section 6041. Confirm the current dollar amount on the IRS page Am I required to file a Form 1099 or other information return? and in the Instructions for Forms 1099-MISC and 1099-NEC.
Count payments per payee for the calendar year, in the course of your trade or business. Personal payments you make as an individual, not in a business, are not the same rule.
2. Which form, and which boxes still differ
Use Form 1099-NEC for nonemployee compensation. That is pay for services by someone who is not your employee. It also covers payments to attorneys for legal services.
Use Form 1099-MISC for rents and several other categories. For 2026 payments, the IRS Guide to Information Returns lists a $2,000 floor for rents, prizes and awards, other income, medical and health care payments, crop insurance proceeds, section 409A deferrals, and gross proceeds paid to an attorney in a settlement.
Some 1099-MISC boxes did not move to $2,000.
- Royalties: $10 or more.
- Substitute payments in lieu of dividends or interest: $10 or more.
- Fish purchased for resale: $600 or more.
- Fishing boat proceeds, excess golden parachute payments, and some nonqualified deferred compensation: all amounts.
- Direct sales of consumer products for resale: $5,000 or more, reported as a checkbox on 1099-NEC or 1099-MISC.
If you withheld federal backup withholding, you file the form for that payee even when the payment is under the normal dollar floor.
Form 1099-K is separate. For third-party settlement networks, the federal filing line is more than $20,000 and more than 200 transactions. Card transactions follow a different 1099-K rule. Do not apply the new $2,000 NEC floor to 1099-K. See the IRS Form 1099-K FAQs.
3. Due dates and e-file
Form 1099-NEC is due to the IRS and to the recipient by January 31.
Form 1099-MISC is due to the recipient by January 31. Paper filing with the IRS is due February 28. Electronic filing with the IRS is due March 31.
If a due date falls on a Saturday, Sunday, or legal holiday, use the next business day.
If you file 10 or more information returns in total, including W-2s and 1099s, you generally must e-file. See the IRS page on reporting payments to independent contractors.
Washington does not have a personal income tax, so there is no Washington 1099 income-tax filing to match the federal form. If you pay Oregon contractors or Oregon-source work, Oregon may still want copies through its iWire system. Check Oregon DOR for the current state list and any state dollar floor. Do not assume the federal $2,000 number is automatic for every state.
4. What the new floor does not change
Contractors still report all business income, with or without a 1099.
A missing form does not make $1,800 of 2026 gig or contract pay tax-free.
Form W-9 is still the tool you use before you pay. Get a signed W-9 so you have the legal name, tax classification, and taxpayer identification number. You will not know in January whether that vendor will cross $2,000 by December.
Backup withholding is still 24% when the payee does not give a usable TIN, or when the IRS tells you to withhold. Report that withholding on the 1099 and on Form 945. See IRS Topic no. 307, Backup withholding.
Corporations are often exempt from 1099-NEC for ordinary services. Payments to attorneys are a common exception. Read the current form instructions before you skip a payee.
Employee wages stay on Form W-2. If the worker is your employee, do not use 1099-NEC to avoid payroll. That is a classification question, not a threshold question. Get advice before you reclassify anyone.
5. What to do before year-end
- Pull a year-to-date payee list from your books now. Group payments by vendor, not by invoice.
- Mark who is already over $2,000. Mark who is close.
- Collect missing W-9s this fall, not in January.
- Keep the same records you would have kept at $600. Bank exports, invoices, and canceled checks still matter if the IRS or a state asks later.
If we keep your books or prepare your business return, bring the vendor list to your appointment. Northwest Accounting & Tax Service can help you match payees to the right 2026 form before the January filing window.
Schedule a tax planning or preparation appointment. Call or text 360-694-8206.
This article is educational. It is not a tax opinion and is not written for your specific facts. Northwest Accounting & Tax Service does not intend it as legal advice or investment advice. Reading it does not make you a client. Figures and deadlines can change after the date on the post. Check the IRS, Washington DOR, or Oregon DOR for current rules, or schedule a tax planning appointment with us at 360-694-8206.