1099 Employee Reporting Threshold Increased
May 05, 2026
At a glance
Effective January 1, 2026, the threshold for reporting nonemployee payments on IRS forms 1099-NEC and 1099-MISC has increased from $600 to $2,000.
Federal nonemployee payment threshold
Due to the One Big Beautiful Bill Act (OBBBA), the 2026 reporting threshold for IRS Form 1099 will quadruple from $600 to $2,000.
OBBBA guidance indicates the higher threshold takes effect for nonemployee payments made on or after January 1, 2026, and will be annually adjusted for inflation thereafter.
This change does not, however, change what qualifies as taxable income.
The updated threshold applies to IRS Form 1099-NEC for contractor payments and IRS Form 1099-MISC for rent, prizes, and other miscellaneous income.
For more information, refer to IRS 20206 Publication 1099.
State nonemployee payment threshold
Some states may elect to maintain the $600 threshold that has been in place for seven decades.
Next steps
Threshold updates have been made to Paylocity's payroll system, and we'll monitor state responses throughout 2026 for any that choose to not align with the new federal nonemployee payment threshold.
Thank you for choosing Paylocity as your valued service partner. This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.
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