1099-NEC News for 2025 and 2026—What Every Business Owner Needs to Know!

Form 1099-NEC is used to report payments you make in the course of business to independent contractors, freelancers, or other non-employees. Here’s what you need to know for the 2025 and 2026 tax years.

 

2025: The $600 Rule Still Applies

For payments you make in 2025 (filed in early 2026), the rules remain the same as recent years:

• Who gets a 1099-NEC?
  Anyone (individual, partnership, LLC, or estate) you pay $600 or more for services in the course of your business. This includes independent contractors, consultants, accountants, and attorneys (even if they are incorporated).
• Deadline:
  You must send the 1099-NEC to your payees and file it with the IRS by February 2, 2026.
• TIN matching:
  The IRS will reject 1099s if the name and taxpayer ID (TIN/SSN) don’t match their records. If you get a mismatch notice, you must correct and resubmit by the deadline to avoid penalties.
• Tip! Secure completed form W-9 before issuing payment so you have the information you need to meet your filing requirement.

2026: The Threshold Jumps to $2,000

Starting with payments made in 2026 (filed in early 2027), the rules change due to new legislation:

• Who gets a 1099-NEC?
  Only those you pay $2,000 or more for services in the course of your business. This is a significant increase from the previous $600 threshold.
• Annual adjustment:
  The $2,000 threshold will be adjusted for inflation each year after 2026.
• Deadline:
  The due date for sending and filing the 1099-NEC will remain in early February (the exact date will be announced by the IRS each year).

Bottom Line:
For 2025, issue a 1099-NEC for anyone you pay $600 or more. For 2026, the threshold rises to $2,000. Keep good records, obtain completed W-9 forms, and file on time to avoid penalties!

 

Honorine M. Campisi, CPA