Do You Need to Send a 1099 in 2026? A Contractor's Guide

Current as of the 2026 tax year. 1099 rules can change year to year — see the note at the bottom.

If you paid subcontractors, freelancers, or other independent workers during the year, you may be required to send them a Form 1099-NEC — and file a copy with the IRS. The rules just shifted in a big way, so here's how to tell whether it applies to you, without the jargon.

The big change for 2026

For decades, the trigger was $600 — a figure that hadn't moved since 1954. Under the One Big Beautiful Bill Act, signed in July 2025, the reporting threshold for Form 1099-NEC (and 1099-MISC) rose from $600 to $2,000, beginning with payments made on or after January 1, 2026.

Payments made in…	Threshold that applies	Forms filed in…
2025 (and earlier)	$600 or more	early 2026
2026 onward	$2,000 or more	early 2027

So a business that pays a contractor $1,800 in 2026 is generally no longer required to issue a 1099-NEC — where the old $600 rule would have required one. Note the timing: forms you file in early 2026 are for 2025 payments and still use the $600 threshold; the new $2,000 threshold first applies to 2026 payments, which are filed in early 2027. Beginning in 2027, the $2,000 figure is set to adjust for inflation each year.

The catch nobody mentions

The threshold change is paperwork relief for businesses — but a contractor's tax obligation hasn't changed at all. Income is still taxable and still has to be reported, even when no 1099 is issued. Fewer forms doesn't mean less income to account for.

Who actually gets a 1099-NEC?

For 2026 payments, you generally issue one to a worker when all of these are true:

You paid them $2,000 or more for the year (for 2026 payments; it was $600 for 2025 and earlier)
The payment was for services (labor, work performed), which can include parts and materials provided as part of the service — but not payments that are purely for goods
They're an independent contractor, not your employee
They operate as an individual, sole proprietor, partnership, or single-member LLC (payments to most corporations are typically excluded, with some exceptions)

Common examples for a contractor's business (2026 payments)

A subcontractor you paid $4,000 to frame a job → likely yes
A handyman you paid $2,400 across several small jobs → likely yes (it's the yearly total per person that matters, not per job)
A helper you paid $1,500 for the year → likely no under the new 2026 threshold (though the same amount would have triggered a form under the old $600 rule)
A supplier you paid $10,000 for lumber only → likely no (that's goods, not services)

What did NOT change — and still matters

The January 31 deadline. 1099-NEC forms are due to your contractors and to the IRS by January 31 — the same date for both copies, whether you file on paper or electronically, with no separate extension for e-filing. When January 31 falls on a weekend, the deadline rolls to the next business day (for example, 2026 payments are reported by February 1, 2027, since January 31, 2027 is a Sunday). It's early — right when the year just ended — which is why it catches so many owners off guard.
Collecting W-9s. You still need a signed Form W-9 from every contractor. You won't know mid-year who will cross $2,000, so getting the W-9 before the first check is still the move.
Keeping records all year. The higher threshold makes running totals per contractor even more useful — that's how you know who lands over $2,000 by December.
State rules. The federal $2,000 threshold doesn't automatically override state-level reporting requirements, and some states set their own lower thresholds.

Worth knowing

Thresholds, forms, and filing rules can change, states can differ from the federal rule, and every business's situation is different. This page explains the general framework — your specific filing obligations should be confirmed with your tax professional.

Two ways to stay ahead of it

Whether you'd rather handle 1099 tracking yourself or hand the whole thing off, here's a path for each:

Track it yourself

A simple subcontractor & 1099 tracker to log who you paid, how much, and whether they've crossed the threshold — with a year-end summary ready for filing. Works in Excel and Google Sheets.

Get the 1099 Tracker

Hand it off

If keeping up with subcontractor payments and year-end forms is one more thing you don't have time for, let's talk. I keep contractor books organized all year so January isn't a fire drill.

Book a Free Consultation

This guide is general information for educational purposes only and is not tax, legal, or accounting advice. 1099 rules, thresholds, and deadlines can change, state requirements can differ from federal rules, and every business's circumstances are different. Please consult a qualified tax professional about your specific filing obligations. Bookkeeping by Nalini LLC provides bookkeeping services and general information only — not CPA, tax, legal, or financial advice.

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