The $2,000 1099-NEC threshold: what US companies file in January 2027

For payments made in 2026, a US business only issues a 1099-NEC once it has paid a contractor $2,000 or more, up from $600. The first forms under the new rule are due in January 2027. Here is what changed and what did not.

William Sunjo M.Operations and compliance editor

Published: 2 November 2026
Reading time: 2 min read

A US business that pays independent contractors reports those payments to the IRS on Form 1099-NEC. The trigger was $600 a year per contractor for decades. For payments made in 2026 the trigger is $2,000, and January 2027 is the first filing season under the new number.

What changed

	Payments made in 2025	Payments made in 2026
1099-NEC threshold	$600	$2,000
1099-MISC threshold (most boxes)	$600	$2,000
Inflation indexing	No	From 2027
1099-K threshold	Being phased down	$20,000 and 200 transactions

The change came in the One Big Beautiful Bill Act, signed in July 2025. Fewer small payments will need a form. A contractor you paid $1,500 in 2026 gets no 1099-NEC from you, although they still owe tax on the income.

What to file in January 2027

Pull every contractor paid in 2026 and total by tax ID.
Mark everyone at $2,000 or more.
Check you have a W-9 on file for each of them. Ask now, not in late January.
File 1099-NEC with the IRS and send copies to contractors by 31 January 2027.

Payments by card or through a payment platform are reported by the platform on a 1099-K, not by you on a 1099-NEC. Leave those out.

Foreign contractors

This is where most mistakes happen. A foreign person who does the work outside the US is not paid US-source income, and you do not issue a 1099. You do need proof of foreign status:

W-8BEN for an individual contractor.
W-8BEN-E for a foreign company.

The W-8BEN vs W-8BEN-E guide explains which to ask for and what each line means. If a foreign contractor travels to the US and does the work there, the income can become US-source. That calls for Form 1042-S and possibly withholding, so speak to a tax adviser before paying.

Keep payment records that match

Whatever the threshold, keep an invoice, a contract and a payment record for each contractor payment. If a contractor is ever reclassified as an employee, those records are your evidence. Our guide to paying international contractors covers the paperwork in more detail.

This article explains the rules in general terms. It is not tax advice for your company.

Paying contractors from Rivet

Rivet pays contractors in more than 120 countries, one at a time or in a batch, and keeps each payment with its reference for year-end. See Payouts.

Questions people ask

What is the 1099-NEC threshold for 2026?

$2,000 paid to one contractor during the calendar year. Before 2026 it was $600. The change applies to payments made after 31 December 2025, so the first forms under the new number are filed in January 2027.

When is the 1099-NEC due?

By 31 January of the year after payment, both to the contractor and to the IRS. If 31 January falls on a weekend, the deadline moves to the next business day.

Do I issue a 1099 to a foreign contractor?

Not if the contractor is a foreign person and the work was done outside the US. Collect a W-8BEN from an individual or a W-8BEN-E from a company to document foreign status. Work performed inside the US by a foreign person can call for Form 1042-S and withholding instead.

What happened to the 1099-K threshold?

The 2025 law restored the earlier test: a payment platform files a 1099-K when a payee receives more than $20,000 across more than 200 transactions in the year.

Sources

Written by

William Sunjo M.

Operations and compliance editor

William covers what happens once a company starts moving money: getting the business verified, paying contractors and suppliers abroad, and keeping card spend under control. William writes for the founder or finance lead who has to make it work this week, and links every rule cited to the text it comes from.