Form 1099-NEC threshold rises to $2,000 while 1099-K returns to $20,000

Businesses that pay freelancers, contractors and other nonemployees report those payments to the IRS on Form 1099-NEC. Platforms that settle card and network sales for sellers file a different form, the Form 1099-K. The Form 1099-NEC threshold rose for tax years beginning after 2025, and the Form 1099-K threshold was reinstated under the One, Big, Beautiful Bill.

One threshold rose. The other went back to a level that applied before 2021. The two forms serve different purposes: Form 1099-NEC reports payments to nonemployees, while Form 1099-K reports payments that a settlement entity processes for sellers. The IRS instructions and the agency's Form 1099-K guidance set out how each test works.

Form 1099-NEC and the $2,000 threshold

Form 1099-NEC is used to report nonemployee compensation. The IRS instructions say the minimum threshold for reporting certain payments rose to $2,000 for tax years beginning after 2025. Nonemployee payments below $2,000 generally fall outside the Form 1099-NEC reporting line for 2026. For a business paying a contractor, that means a payment under that amount generally does not trigger the form.

The $2,000 figure may be adjusted for inflation beginning in calendar year 2027.

The $2,000 figure is also tied to backup withholding. The instructions refer readers to part N of Publication 1099 for the backup withholding rate, and both Form 1099-NEC and Form 1099-MISC have a box 4 for federal income tax withheld.

The threshold does not override a withholding requirement. The instructions say a business must file a Form 1099-NEC or Form 1099-MISC for any payee from whom it withheld federal income tax under the backup withholding rules, regardless of the payment amount. A contractor who received a small payment but had tax withheld is therefore still reported.

Payments that keep lower limits

Not every 1099 threshold moved. The instructions for Forms 1099-MISC and 1099-NEC list several other limits for specific payments. Gross proceeds paid to an attorney, reported in box 10 of Form 1099-MISC, are reportable at $600 or more in connection with legal services. Backup withholding also applies to attorney payments when the attorney does not supply a taxpayer identification number.

Cash paid for fish bought for resale, reported in box 11, uses a $600 level. The threshold covers total cash payments of $600 or more during the year to a person in the fish-catching trade or business.

Royalties reported in box 2 of Form 1099-MISC are reportable at $10 or more. Sales of consumer products for resale on a buy-sell, deposit-commission or other commission basis are reportable at $5,000 or more when made anywhere other than in a permanent retail establishment. The instructions say those sales are marked with an X in a checkbox rather than shown as a dollar amount, and payers may use either form. The instructions list this payment type under box 7 of Form 1099-MISC or box 2 of Form 1099-NEC.

Because the thresholds differ by payment type, a business that issues several kinds of 1099 forms should check each box against the instructions rather than apply the $2,000 figure to every payment.

How the Form 1099-K $20,000 and 200-transaction test works

The One, Big, Beautiful Bill reinstated the Form 1099-K reporting threshold that was in effect before the American Rescue Plan Act of 2021. IRS news release IR-2025-107, dated Oct. 23, 2025, says a third-party settlement organization need not file a 1099-K for a payee unless gross reportable payments to that payee exceed $20,000 and the number of transactions exceeds 200. The release accompanies FAQs in Fact Sheet 2025-08.

The release says the One, Big, Beautiful Bill retroactively reinstated the prior threshold. A headline in the recent developments section of the IRS Form 1099-K page, dated Nov. 17, 2025, also refers to the dollar limit reverting to $20,000.

The IRS Form 1099-K page describes the form as covering any payment card or third-party network transaction. A payment settlement entity files the form for reportable payment transactions. The page says a payment is made in settlement when the entity submits the instruction to transfer funds to the account of the participating payee.

Filing deadlines for 2026 payments

For payments made in 2026, Form 1099-NEC payee statements must be furnished and the form filed with the IRS by January 31.

Form 1099-MISC payee statements are also due January 31. For the IRS filing of Form 1099-MISC, the deadline is February 28 on paper and March 31 if filed electronically.

If a due date falls on a Saturday, Sunday or legal holiday in the District of Columbia or where the return is to be filed, the due date moves to the next business day. This rule applies to the federal dates listed above.

What to check before filing

Payers should first identify the form type for each payment. The thresholds for Form 1099-NEC, Form 1099-MISC and Form 1099-K operate differently. The $2,000 figure applies to nonemployee payments and the related backup withholding rules, while gross proceeds paid to attorneys (box 10 of Form 1099-MISC) and cash fish-purchase payments use the $600 level.

A payment below $2,000 can still need reporting if tax was withheld from it. The instructions apply the withholding rule regardless of the payment amount, so a payment total alone does not settle whether a form is required.

Platform sellers and payees should confirm whether a 1099-K covers their transactions under the $20,000 and 200-transaction test. Under the IRS release, the test is applied by the settlement organization, so both the dollar total and the transaction count are part of the filing condition.

Because the $2,000 figure may be adjusted for inflation beginning in calendar year 2027, the threshold for later payment years may differ from the 2026 figure described here.