How Public Law 119-21 Lifts the 1099-NEC and 1099-MISC Threshold From $600 to $2,000

Businesses that pay contractors, landlords and other vendors may have to report those payments to the IRS. For tax years beginning after 2025, the minimum threshold for reporting certain payments is $2,000, according to the IRS instructions for the 2026 forms. The $2,000 figure is up from $600, according to Sovos, and the 2026 forms add boxes for tips and overtime.

Form 1099-NEC covers nonemployee compensation, and Form 1099-MISC covers the other categories listed in the instructions, such as rents and royalties. Each form is sent to the recipient and filed with the IRS. The bill’s table of contents lists Section 70433 of Public Law 119-21 as an increase in the reporting threshold for certain payees. The same law includes provisions on tips and overtime in Sections 70201 and 70202, and the 2026 forms add new boxes for those amounts.

Who Must File Form 1099-NEC

Form 1099-NEC is the IRS form for reporting nonemployee compensation. According to the form’s instructions, a business generally must report when it paid someone who is not its employee for services in its trade or business, the payee is an individual, partnership or estate (or, in some cases, a corporation), and the total for the year reaches at least $2,000. That amount is reported in box 1a, nonemployee compensation.

The IRS Form 1099-NEC page describes the form as the place to report nonemployee compensation, and it links to the instructions for both Form 1099-MISC and Form 1099-NEC.

Payments to corporations are generally exempt from the reporting requirement. The instructions name these exceptions to the corporate exemption: payments for legal services, payments by federal executive agencies for services, and, on Form 1099-MISC, payments for medical or health care services. A payment to a corporation for legal work can therefore still require a form.

The test looks at payments to each payee during the year. Personal payments that are not made in the course of a trade or business fall outside the requirement, which applies only to business payments.

The Threshold in Brief
The IRS instructions for the 2026 Forms 1099-NEC and 1099-MISC set the minimum threshold for reporting certain payments at $2,000, which Sovos describes as up from $600, and say the amount may be adjusted for inflation starting in 2027.

What Form 1099-MISC Covers

Form 1099-MISC covers other payments, including rents, prizes and awards, medical and health care payments, and crop insurance proceeds. These are generally reported at $2,000 or more. Medical and health care payments appear in box 6.

Some payments carry lower triggers. Royalties are reported at $10 or more in box 2, and broker substitute payments in lieu of dividends or tax-exempt interest, in box 8, carry the same $10 figure. Gross proceeds paid to an attorney are reported at $600 or more in box 10, and cash fish purchases for resale are reported at $600 or more in box 11.

Direct sales of consumer products for resale carry a $5,000 threshold and are reported with a checkbox in MISC box 7 or NEC box 2.

A business that pays both a contractor for services and a landlord for rent may therefore need to issue both forms.

How the $2,000 Threshold Is Set and May Be Adjusted

The bill’s table of contents lists Section 70433 of Public Law 119-21 under a title describing an increase in the threshold for information reporting for certain payees. The IRS instructions say the minimum threshold for reporting certain payments, and/or backup withholding on them, rose to $2,000 for tax years beginning after 2025.

Sovos describes the new figure as up from $600 in 2025. It says the amount will be inflation-adjusted in future years, without giving a start year. The IRS instructions say the threshold may be adjusted for inflation beginning in calendar year 2027.

Dates for the 2026 instructions differ across sources. The Sovos article on the instructions is dated July 10, 2026. The IRS instructions page is labeled as revised 12/2026 and lists July 1, 2026, as its last review date, while the IRS Form 1099-NEC page lists June 7, 2026.

The IRS instructions say the 12/2026 revision applies to 2026 information returns filed in early 2027, and to later years until a superseding revision is issued.

New Tip and Overtime Boxes on the 2026 Forms

The 2026 instructions add boxes for qualified cash tips, Treasury Tipped Occupation Codes and qualified overtime compensation. On Form 1099-NEC, cash tips are reported in box 1b, the occupation code in box 1c, and overtime in box 1d. On Form 1099-MISC, the same items sit in box 13a, box 13b and box 14.

Only the premium portion of overtime is reported, meaning the half in time-and-a-half. The instructions use that half as the example.

Up to two occupation codes may be entered. If tips were received in a nonqualifying occupation, the instructions say to enter 000 as one of the codes.

The $2,000 figure is up from $600, according to Sovos, and the 2026 forms add boxes for tips and overtime.

Layout Changes Beyond the New Boxes

Sovos says the new tip and overtime boxes support the tax exemptions for those amounts. It also says the single address field was split into separate boxes for each address element, and that other boxes were renumbered.

On Form 1099-MISC, the FATCA indicator moved from Box 13 to an unnumbered check box, according to Sovos.

The IRS instructions place cash tips on Form 1099-NEC in box 1b and on Form 1099-MISC in box 13a, so the same figure appears under a different box number on each form.

Filing Dates for 2026 Payments

Form 1099-NEC must be furnished to recipients and filed with the IRS by January 31. Form 1099-MISC must be furnished to recipients by January 31, and filed with the IRS by February 28 on paper or March 31 if filed electronically.

When a due date falls on a weekend or legal holiday, the due date is the next business day. January 31, 2027 is a Sunday, so the next business day is Monday, February 1, 2027.

Both forms share the January 31 date for furnishing copies to recipients. For Form 1099-MISC, the IRS filing date differs from that date, while for Form 1099-NEC the recipient and IRS dates are the same.

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