Inside OBBBA: 1099-NEC and 1099-MISC Thresholds Set to Rise Under OBBBA

In a move that will likely lighten the compliance load for many businesses, OBBBA includes an easily overlooked—provision and a long-awaited increase in the reporting thresholds for IRS Forms 1099-NEC and 1099-MISC.

From $600 to $2,000: A Meaningful Shift
Historically, businesses have been required to issue Form 1099-NEC for nonemployee compensation (like payments to independent contractors) and Form 1099-MISC for certain other types of income—such as rents and prizes—when payments to a single recipient met or exceeded just $600 in a calendar year.

That threshold has remained unchanged for decades, despite inflation and the growing administrative burden it has placed on businesses of all sizes. As a result, even small companies found themselves issuing dozens—or hundreds—of 1099s each year.

Starting with payments made in calendar year 2026, OBBBA raises the reporting threshold to $2,000. Even better, the law includes a provision to index that amount for inflation beginning in 2027, helping prevent the threshold from becoming outdated once again.

What This Means for Businesses
This change represents a significant reduction in compliance pressure, especially for small and mid-sized businesses. Here’s why it matters:

Fewer Forms to File: Many lower-value service payments will no longer trigger 1099 filing requirements.

Reduced Overhead: Businesses may see savings in staff time, software costs, and filing fees.

Modernization: The change reflects a long-needed update to match today’s business realities.

Still, businesses should be careful not to assume the new rules apply immediately. The higher threshold doesn’t kick in until the 2026 tax year, meaning Forms issued for 2024 and 2025 should still follow the $600 rule.

The Bottom Line
The increase in 1099-NEC and 1099-MISC reporting thresholds under the OBBBA is a welcome development for many businesses burdened by compliance paperwork. Although the change will not take effect for a few more years, gaining a clear understanding of the new requirements now can help facilitate a smoother transition—when 2026 arrives. For more information about OBBBA, read our recent summary of the key tax changes under the One Big Beautiful Act of 2025.