OBBBA'S NEW 1099 FILING RULES
Filing tax forms is never fun—but it’s important to stay ahead of changes that can reduce your reporting burden.
If your business pays independent contractors (non-employees) for services, you are required to file IRS Form 1099-NEC if total payments exceed a specific threshold. For decades, this threshold has been $600 or more in a calendar year. Failing to file can result in substantial penalties.
That threshold is about to change.
Thanks to the One Big Beautiful Bill Act (OBBBA), beginning with payments made in 2026, you file Form 1099-NEC if you pay an independent contractor $2,000 or more during the year. Starting in 2027, this amount will be adjusted annually for inflation in $100 increments.
This welcome update means many businesses will have fewer 1099-NEC filing obligations.
Changes to Form 1099-K Thresholds
The OBBBA also revised the filing rules for Form 1099-K, which is used by third-party settlement organizations (TPSOs) such as PayPal, Uber, and eBay. These platforms are responsible for issuing 1099-Ks when payments meet certain criteria. For example, if you pay a contractor via PayPal, you (the contractor’s client) do not file a 1099-K—PayPal does, if the 1099-K filing threshold is met.
Previously, the 1099-K threshold was set to drop to $5,000 in 2025 and then to $600 in 2026—potentially triggering billions of filings. However, the OBBBA reverses this change.
Effective retroactively to 2022 (yep, three years ago), TPSOs need to file Form 1099-K if both of the following apply:
If your business pays independent contractors (non-employees) for services, you are required to file IRS Form 1099-NEC if total payments exceed a specific threshold. For decades, this threshold has been $600 or more in a calendar year. Failing to file can result in substantial penalties.
That threshold is about to change.
Thanks to the One Big Beautiful Bill Act (OBBBA), beginning with payments made in 2026, you file Form 1099-NEC if you pay an independent contractor $2,000 or more during the year. Starting in 2027, this amount will be adjusted annually for inflation in $100 increments.
This welcome update means many businesses will have fewer 1099-NEC filing obligations.
Changes to Form 1099-K Thresholds
The OBBBA also revised the filing rules for Form 1099-K, which is used by third-party settlement organizations (TPSOs) such as PayPal, Uber, and eBay. These platforms are responsible for issuing 1099-Ks when payments meet certain criteria. For example, if you pay a contractor via PayPal, you (the contractor’s client) do not file a 1099-K—PayPal does, if the 1099-K filing threshold is met.
Previously, the 1099-K threshold was set to drop to $5,000 in 2025 and then to $600 in 2026—potentially triggering billions of filings. However, the OBBBA reverses this change.
Effective retroactively to 2022 (yep, three years ago), TPSOs need to file Form 1099-K if both of the following apply:
- The recipient is paid more than $20,000.
- The recipient has more than 200 transactions during the year.
The limits adjust annually for inflation beginning in 2026. But unless extended by Congress, the cap returns to $10,000/$5,000 in 2030.
There’s a catch. The increased deduction phases out if your modified adjusted gross income (MAGI) exceeds
There’s a catch. The increased deduction phases out if your modified adjusted gross income (MAGI) exceeds
- $500,000 (joint filers), or
- $250,000 (married filing separately).
This rollback to the 2022 threshold means far fewer Forms 1099-K will be issued. Both TPSOs and recipients can breathe a sigh of relief.
A Final Reminder
Regardless of whether a 1099 form is issued, all taxpayers must report all taxable income on their tax returns—even if it’s not reported to the IRS by a third party.
A Final Reminder
Regardless of whether a 1099 form is issued, all taxpayers must report all taxable income on their tax returns—even if it’s not reported to the IRS by a third party.