1099 threshold changes: Key updates explained

Form 1099 reporting thresholds have been in flux for years, complicating income tax compliance for freelancers, gig workers, marketplace sellers, and other affected taxpayers. First, the American Rescue Plan Act of 2021 (ARPA) slashed the 1099-K thresholds; then the IRS delayed implementation; and finally, the One Big Beautiful Bill Act of 2025 (OBBBA) reversed the ARPA threshold changes. This overview of the 1099 threshold changes will help you understand 1099 reporting requirements.

• The Form 1099-K reporting threshold is now permanently $20,000 and 200 transactions. The American Rescue Plan of 2021 lowered the 1099-K reporting threshold to $600. The One Big Beautiful Bill Act of 2025 reinstated the $20,000 and 200 transactions 1099-K threshold.

• The 1099-MISC thresholds and 1099-NEC thresholds increase in 2026. Forms 1099-MISC and 1099-NEC have more than one threshold, and several of these thresholds jump from $600 to $2,000.

• Annual inflation adjustments begin with tax year 2027. The reporting thresholds for Form 1099-NEC and Form 1099-MISC will be adjusted for inflation annually starting in 2027.

A 1099 form is an IRS tax form documenting payments made to a business, individual, or entity that isn’t an employee. The payer is generally required to send the appropriate 1099 form to the payee by January 31, though some 1099 forms are due after that. All 1099 forms must also be filed with the IRS.

There are currently more than 20 different 1099 forms, including Form 1099-K, Form 1099-NEC, and Form 1099-MISC.

Form 1099-K reports non-W-2 income received during the year from the following:

• Payment card transactions (credit, debit, or stored value cards, such as gift cards) 

• Third-party network transactions (payment apps or online marketplaces, including third-party payment settlement organizations)

Form 1099-NEC reports nonemployee compensation — income received for work as a consultant, freelancer, or independent contractor.

Form 1099-MISC reports income from miscellaneous sources not covered by another 1099 form, such as awards and prizes, fishing boat proceeds, and rents. 

There’s just one reporting threshold for Form 1099-K, but Forms 1099-MISC and 1099-NEC have different reporting thresholds for different types of income. For tax year 2025, the 1099 thresholds were as follows.

• Form 1099-K threshold: $20,000 in aggregate payments and 200 transactions

• Form 1099-MISC thresholds:
  • At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest
  • At least $600 in rents, prizes and awards, other income payments, cash paid from a notional principal contract to an individual, partnership, or estate, fishing boat proceeds, medical and health care payments, crop insurance proceeds, gross proceeds paid to an attorney, Section 409A deferrals, or nonqualified deferred compensation
  • Sales totaling $5,000 or more of consumer products to a person on a buy-sell, deposit-commission, or other commission basis for resale  
• Form 1099-NEC thresholds:
  • $600 in services performed by someone who is not an employee or payments to an attorney
  • Sales totaling $5,000 or more of consumer products to a person on a buy-sell, deposit-commission, or other commission basis for resale

The OBBBA increased the dollar threshold for reporting certain payments on Form 1099-MISC and Form 1099-NEC from $600 to $2,000 for payments made on and after January 1, 2026. It also indexed the threshold for inflation for calendar years after 2026.

In March 2026, the IRS provided more threshold details. Publication 1099 lists the following 1099-MISC thresholds and 1099-NEC thresholds for tax years beginning after 2025.

Note that some thresholds for Forms 1099-MISC and 1099-NEC will not increase. For example, on Form 1099-MISC, the threshold for royalties and certain substitute payments remains $10.

Reporting thresholds for Forms 1099-MISC and 1099-NEC will be adjusted annually for inflation starting with tax year 2027. The 1099-K threshold will not be adjusted for inflation so will remain $20,000 and 200 transactions.

For additional information, see IRS Publication 1099, General Instructions for Certain Information Returns for use in preparing 2026 returns.

The American Rescue Plan Act of 2021 slashed the 1099-K reporting threshold significantly, lowering it from $20,000 and 200 transactions to $600, period. It didn’t alter the $600 reporting threshold for the 1099-MISC or 1099-NEC. 

The 1099-K $600 threshold was scheduled to take effect for the 2022 tax year. However, the IRS pushed back the threshold change twice to “reduce taxpayer confusion.” In announcing the delay, the IRS explained that an estimated 44 million Forms 1099-K would be sent to many taxpayers “who wouldn’t expect one and may not have a tax obligation.” 

The IRS also said it planned to phase in the $600 reporting threshold change over three years, starting with a threshold of $5,000 for tax year 2024. But before any such change could be implemented, Congress enacted the One Big Beautiful Bill Act of 2025 (OBBBA). 

The One Big Beautiful Bill Act (OBBBA), which became law on July 4, 2025, reverted the Form 1099-K reporting threshold to $20,000 and 200 transactions. It completely repealed the $600 rule established by the American Rescue Plan Act of 2021. Per the legislation, this takes effect “as if included in section 9674 of the American Rescue Plan Act.” 

OBBBA also increased the reporting thresholds for Form 1099-NEC and many reporting requirements for Form 1099-MISC, as explained above. Read One Big Beautiful Bill Act changes 1099 thresholds for more details.

Form 1099 thresholds are not top of mind for many businesses and individuals. In January 2025, 74% of gig economy workers surveyed by Censuswide couldn’t identify the payment threshold above which they’d be required to report income to the IRS in 2025. 

Streamlining management of 1099 and W-9 forms can help ease the burden of compliance for businesses. Avalara 1099 & W-9 stores vendor and freelancer information, imports 1099 payee data, and transfers vendor details quickly, all while automatically checking for errors. It also checks for valid TINs/SSNs when W-9s are collected and checks for valid TINs when 1099s are filed, preventing errors and minimizing B-notices, corrections, and manual effort.

Learn more about Avalara 1099 & W-9.

What is the IRS 1099-K reporting threshold for 2025 and 2026?

Following the passage of the One Big Beautiful Bill Act of 2025, the IRS 1099-K reporting thresholds are $20,000 in aggregate payments and 200 transactions. This new legislation officially reverses an earlier requirement to lower the reporting limit to $600 for third-party settlement organizations and payment apps.

When do the new 1099-NEC and 1099-MISC limits take effect?

Higher reporting thresholds for Form 1099-NEC and Form 1099-MISC take effect beginning in the 2026 tax year. For 2027 and subsequent years, these reporting thresholds will be automatically adjusted annually to account for inflation. 

Do I still owe taxes if I don’t receive a 1099 form?

Yes. Even if your freelance, gig, or marketplace earnings fall below the official reporting thresholds (such as the $20,000 limit for a 1099-K or the $2,000 limit for a 1099-NEC) and a company does not send you a form, you are still legally required by the IRS to report all taxable income on your tax return. Per the IRS, “You must file a tax return if you have net earnings from self-employment of $400 or more from gig work, even if it’s a side job, part-time or temporary.”

This blog post was updated on June 10, 2026.