New Business Payment Reporting Rules for Small Business Owners

The One, Big Beautiful Bill Act (OBBBA) delivers long-awaited updates to IRS reporting requirements. Starting with payments made in 2026, the threshold for filing certain information returns will rise from $600 to $2,000. Beginning in 2027, the threshold will be indexed for inflation.

Saying Goodbye to the $600 Threshold

For decades, businesses have had to issue Form 1099-NEC (and before that, Form 1099-MISC) to independent contractors paid more than $600 in a calendar year. That same $600 threshold also applied to other payments reported on Form 1099-MISC, such as rents, prizes, and attorney fees.

The deadlines remain strict:

• Form 1099-NEC: Must be provided to recipients and filed with the IRS by January 31.

• Form 1099-MISC: Must be provided to recipients by January 31. Filing deadlines for the IRS vary — February 28 for paper filers, March 31 for electronic filers.

This $600 reporting threshold has been unchanged since the 1950s, making it increasingly burdensome for today’s businesses.

The New $2,000 Threshold

Now, the reporting threshold jumps to $2,000. The new increase means fewer 1099 forms will need to be issued, less paperwork and lower administrative costs for businesses.

Required Recipient Reporting

It’s important to note that independent contractors must still report all taxable income on their personal returns, even if they don’t receive a 1099. Businesses, in turn, must keep accurate payment records regardless of whether a form is filed.

Updates to Form 1099-K

The OBBBA also resets reporting rules for third-party payment networks. The threshold for Form 1099-K reporting returns to $20,000 and 200 transactions — rolling back changes from the 2021 American Rescue Plan Act that had moved toward a $600 threshold.

Relief for Small Businesses

 By raising the filing threshold, the OBBBA reduces compliance burdens, saves time, and lowers the risk of IRS penalties for failing to file forms. For small businesses that work regularly with contractors, these updates provide meaningful administrative relief.