New 1099 Reporting Thresholds: What is Changing Under the Big Beautiful Bill
Here is a breakdown of what you need to know about the new 1099 reporting thresholds, how they differ from prior law, and what action you may need to take as a taxpayer or business owner.
Key Takeaway: Higher Thresholds, Less Paperwork
The new law raises the thresholds for reporting certain payments on 1099 forms, with the goal of reducing the administrative burden for small businesses and casual earners.
1. Changes to Form 1099-K (Third-Party Payment Platforms)
Old Rule (2023 & prior):
$600 in payments for goods or services triggered a 1099-K—regardless of how many transactions you had.
New Rule (Effective Retroactively to 2022):
The threshold reverts to $20,000 AND 200 transactions per year.
This means that platforms like PayPal, Venmo, Etsy, and eBay will not issue a 1099-K unless both thresholds are met.
This change is retroactive to 2022.
If you received a 1099-K in prior years under the $600 rule, you may not see one again unless your activity meets the higher bar.
2. Changes to Form 1099-MISC and 1099-NEC
Old Rule:
Payments of $600 or more to nonemployees or vendors triggered a 1099-NEC or 1099-MISC.
New Rule (Effective 2026):
The reporting threshold increases to $2,000 per payee for both forms.
Inflation Adjustment Begins in 2027:
Starting with the 2027 tax year, the threshold will be indexed annually for inflation.
Backup withholding rules are also updated.
Beginning in 2027, withholding only applies if the payment exceeds the updated annual threshold.
Why This Matters
These changes are designed to:
Reduce the number of small-dollar 1099s issued
Ease compliance burdens for gig workers and small payors
Improve targeting of IRS resources toward larger and higher-risk activities
However, it’s important to note: income is still taxable, even if a 1099 is not issued. Proper recordkeeping remains essential.
What You Should Do Now
For Businesses & Payors:
Update your 1099 tracking systems to reflect the higher thresholds starting in 2026.
Review vendor lists to identify who may no longer need a form.
Ensure proper W-9 documentation is still collected.
For Gig Workers & Freelancers:
Don’t rely on 1099s alone to report your income—keep accurate records year-round.
If you don’t receive a form but earn income, you’re still required to report it on your return.
For Everyone:
Talk with your CPA or accounting team now about how these changes may affect your reporting obligations for 2025 and beyond.
Be cautious about underreporting income based on outdated rules.
Need Help Navigating 1099 Rules?
I stay ahead of the latest tax law changes so my clients do not have to. Whether you are a business issuing 1099s or a taxpayer receiving them, I can help you stay compliant and tax-efficient under the new law.
Schedule a 1099 strategy session today or email me at cashiola@stevenjcpa.com