The One Big Beautiful Bill Act (OBBBA) raised the reporting threshold for Forms 1099-NEC and 1099-MISC from $600 to $2,000 for payments made after December 31, 2025. At Heritage Accountants & Advisors , we help Long Island businesses update their bookkeeping systems, vendor records, and filing processes to comply with the new rules.
Businesses only issue Form 1099-NEC or 1099-MISC to a contractor once total yearly payments hit $2,000, up from $600. A few payment categories keep their existing lower thresholds. Gross proceeds paid to an attorney remain reportable at $600, and royalty payments remain reportable at $10. Backup withholding is a percentage of certain payments that businesses must withhold and send to the IRS when required taxpayer information is missing or incorrect. The backup withholding trigger also increased to the same $2,000 threshold. Starting in 2027, both figures will adjust for inflation.
Although fewer contractors will receive a 1099, you still owe tax on all taxable income, whether or not a reporting form is issued. Our CPA bookkeeping services in Long Island track these payments internally so you never lose sight of what a contractor actually earned.
Note: a small number of payment types, including attorney gross proceeds and royalties, are excluded from this increase and keep their prior thresholds.
Payment platforms such as PayPal, Venmo, and Stripe generally issue Form 1099-K only when a payee receives more than $20,000 in gross reportable payments and completes more than 200 reportable transactions during the calendar year, unless a lower state reporting threshold applies. The IRS confirmed this reinstated threshold in Fact Sheet 2025-08 , reversing the lower limits that were set to phase in under the American Rescue Plan Act.
A few points worth tracking:
Personal transfers between friends and family are not reportable.
Some states still apply lower, separate 1099-K thresholds.
A platform can still choose to send a 1099-K below the federal limit.
We update vendor files, review contractor payment totals against the new reporting threshold, and identify vendors for whom a federal Form 1099 may no longer be required. Our accounting and bookkeeping services help Long Island clients manage this transition without adding staff hours.
At Heritage Accountants & Advisors, we also separate personal and business payments before year-end to help maintain accurate records and reduce reporting errors. This step is even more important now because fewer reporting forms mean fewer automatic reminders to reconcile contractor income.
A missing 1099 does not erase income from your tax return. The IRS still expects every payment reported, form or no form. Through our small business accounting services in Long Island , clients maintain accurate monthly ledgers so contractor payments below $2,000 remain fully documented, even when no 1099 is issued.
Keeping accurate records throughout the year makes tax reporting easier, whether or not a 1099 is issued. Clean books protect you whether or not a form ever lands in your inbox.
Do I still owe tax on payments under $2,000?
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Yes. The threshold only changes who receives a form, not what you owe.
Does the new $2,000 rule apply to 2025 payments?
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No. It applies to payments made after December 31, 2025, so the 2025 tax year still uses the $600 threshold.
Will the $2,000 threshold increase again?
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Yes. It will be indexed for inflation starting in 2027.
The 2026 reporting changes affect both contractor payments and payment platform reporting. Reviewing your records before year-end can help reduce filing errors and avoid unnecessary forms. Our team helps businesses across Suffolk and Nassau counties apply both changes correctly, reducing the risk of filing errors and unnecessary reporting.
Call Heritage Accountants & Advisors at (631) 543-7700 or email info@heritage.cpa to schedule a review of your 2026 1099 filing plan with our CPA accounting services team on Long Island .
