I heard the 1099 reporting threshold changed. Which vendors get forms now?
The federal reporting threshold for most 1099 forms is scheduled to rise from $600 to $2,000, but the timing matters. For payments made during 2025, you still file using the $600 threshold in early 2026. The higher $2,000 threshold applies to payments made in 2026 and beyond, meaning those forms get filed in early 2027.
After that, the threshold is set to adjust annually for inflation, so the dollar amount will continue changing over time. These details come from recent legislation, but tax rules can shift. Always verify current thresholds with IRS guidance or your tax preparer before filing.
Even when the higher threshold takes effect, your day-to-day practices should not change much. Collecting a W-9 from every contractor before you pay them remains the best practice. You cannot know at the start of the year which contractors will cross the threshold by December. If you wait until payments add up to see who qualifies, you end up chasing W-9s in January when everyone is busy and unresponsive.
The threshold change also does not affect what contractors owe. A freelancer who receives $1,500 from you still owes income tax on that money whether or not you send a 1099. The contractor’s tax obligation exists regardless of whether you file a form. The 1099 is your reporting requirement as the payer.
Multi-state payers should also know that several states maintain their own reporting thresholds, and some are lower than the federal number. If you pay contractors in multiple states, the federal threshold alone does not settle the question. Check each state’s requirements separately, or work with small business bookkeeping services that can keep track for you.
ClearLedgers® provides contractor payment and 1099 services that keep W-9s current throughout the year and monitor which vendors will need forms at year-end. When rules and thresholds change, the underlying discipline of tracking payments and maintaining proper records does not. That foundation makes compliance straightforward regardless of where the numbers land.
If contractor payments and 1099 filings feel like more than you want to manage yourself, book a consultation to see how ClearLedgers can help.
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