For payments made in 2026, you file Form 1099-NEC for a contractor only when you paid them $2,000 or more during the year. That is up from the $600 threshold that applied to payments made through 2025. The change came from the 2025 tax law (often called the One Big Beautiful Bill Act). Forms for 2026 payments are due to recipients and the IRS on February 1, 2027, because January 31, 2027 falls on a Sunday.
Quick answer
| Question | Answer |
|---|---|
| Threshold for payments made in 2026 | $2,000 or more to one payee in the year |
| Threshold for payments made in 2025 | $600 (forms filed in early 2026) |
| Due date for 2026 forms | February 1, 2027, to the recipient and to the IRS |
| Inflation adjustment | The $2,000 base is indexed to inflation for years after 2026 |
| Paper or electronic | Either, but e-filing is required if you file 10 or more information returns in total for the year |
What changed
Section 6041 of the tax code sets the general rule for reporting payments made in a trade or business. The 2025 law raised its base threshold from $600 to $2,000 for payments made after December 31, 2025, and indexed it for inflation for calendar years after 2026. The IRS reflects this in its current Instructions for Forms 1099-MISC and 1099-NEC.
Two timing points cause most of the confusion:
- The forms you filed in January 2026 still used $600. They reported payments made in 2025.
- The $2,000 rule first shows up on forms filed in early 2027, for payments made during 2026.
Who must file a 1099-NEC
You generally file a 1099-NEC when all of these are true:
- You paid someone who is not your employee (an independent contractor, freelancer or other non-employee).
- You paid them for services performed for your trade or business.
- You paid them $2,000 or more in total during 2026.
- The payee is an individual, partnership or LLC taxed as one, or an estate. Payments to most corporations are exempt, but payments to attorneys for legal services are reportable even when the law firm is a corporation.
Personal payments are not reportable. If you hire a plumber for your own home, that is not a business payment.
Collect a Form W-9 from each contractor before you pay them. It gives you the legal name and taxpayer identification number you need for the form, and it saves a scramble in January.
Worked examples
| Contractor | Paid in 2026 | 1099-NEC required? |
|---|---|---|
| Freelance designer (sole proprietor) | $1,800 | No, under $2,000 |
| Freelance designer (sole proprietor) | $2,400 | Yes, due February 1, 2027 |
| Cleaning company (single-member LLC, no corporate election) | $6,000 | Yes |
| IT firm (C corporation) | $9,000 | No, payments to corporations are generally exempt |
| Law firm (professional corporation), legal fees | $3,500 | Yes, the attorney exception applies |
You may still issue a form below the threshold if you want to. It is not required.
What about Form 1099-MISC?
Form 1099-MISC covers payments such as rents and certain other income. The 2025 law changed the general section 6041 threshold, so some 1099-MISC boxes that used $600 now use $2,000 as well. Other boxes keep their own thresholds; royalties, for example, have long had a much lower one. Check each box against the current IRS instructions before you file. Form 1099-MISC is due February 28 on paper or March 31 when filed electronically, with recipient copies generally due January 31 (or the next business day).
Due dates and filing
- Recipient copies and IRS copies of Form 1099-NEC: January 31. If January 31 falls on a Saturday, Sunday or legal holiday, the due date moves to the next business day. For 2026 payments, that is Monday, February 1, 2027.
- Electronic filing: if you file 10 or more information returns of any kind in total for the year (counting W-2s and 1099s together), you must file them electronically. The IRS’s free IRIS portal accepts 1099 forms.
- State copies: many states require their own copy or join the federal and state program. Check each state where you have contractors. Look up each state’s revenue department rules for 1099 copies and for any state withholding on contractor payments.
Late or incorrect forms carry per-form penalties that rise the longer they stay unfiled. The amounts are adjusted every year, so check the IRS page for the year you file.
How to keep this from becoming a January problem
- Get a W-9 before the first payment. No W-9, no payment.
- Tag contractor payments in your books. Use a dedicated expense account or a vendor flag so you can run a year-to-date total by payee in seconds.
- Check the total in October and again in December. Payees close to $2,000 are the ones that get missed.
- Know how you paid. Payments made by credit card or through a payment app such as PayPal are usually reported by the payment company on Form 1099-K, not by you on a 1099-NEC.
- File in January, not on the deadline. Contractors need the form for their own returns, and corrections take time.
If your books already track vendors this way, January takes an hour. If they don’t, RazaPro’s bookkeeping support keeps contractor totals current every month and prepares the 1099 workpaper for you or your CPA to review and file. See the compliance calendar for the other federal and state dates.
This article is general information, not tax or legal advice. Confirm your filing obligations with the IRS instructions or a tax professional.
Last checked against IRS guidance: October 3, 2026.