1099 Threshold for 2026: $2,000 for Payments to Subcontractors
For payments you make in 2026, a sub gets a Form 1099-NEC once you’ve paid them $2,000 or more for the year, up from $600. The forms you file in January 2027 are the first under the new number. Here’s what changed, which subs still get a 1099, and why the threshold doesn’t change what you collect at onboarding.
For tax years beginning after 2025, the IRS minimum for reporting nonemployee compensation on Form 1099-NEC is $2,000, up from $600, and it may be adjusted for inflation from 2027. The same $2,000 applies to backup withholding on those payments. Payments to corporations, including LLCs taxed as corporations, are generally still exempt, except attorneys' fees. Form 1099-NEC is due to the sub and the IRS by January 31.
In this guide
What changed for 2026
The 2026 instructions for Forms 1099-MISC and 1099-NEC say that for tax years beginning after 2025, the minimum amount for reporting certain payments on information returns, and for backup withholding on those payments, increased to $2,000, and may be adjusted for inflation beginning in calendar year 2027. Box 1a of the 1099-NEC now reads: nonemployee compensation of $2,000 or more.
| Payments made in | 1099-NEC due | Report a sub paid |
|---|---|---|
| 2025 | January 31, 2026 | $600 or more |
| 2026 | January 31, 2027 | $2,000 or more |
| 2027 onward | January 31 of the next year | $2,000, possibly adjusted for inflation |
The threshold is the total you paid the sub over the calendar year, not per invoice or per job. A sub who did three $900 jobs for you in 2026 gets a 1099; a sub who did one $900 job doesn’t.
Don’t expect older forms and checklists to say so. The W-9 itself, last revised in March 2024, still prints “payments over $600” in its instructions, and plenty of accounting templates do too.
Which subs get a 1099-NEC
The threshold is half the question. The other half is what kind of business the sub is, and that’s the box they ticked on line 3a of their W-9:
| W-9 line 3a says | 1099-NEC at $2,000+? |
|---|---|
| Individual/sole proprietor (including a single-member LLC owned by an individual) | Yes |
| Partnership, or LLC with "P" | Yes |
| C corporation or S corporation | Generally no |
| LLC with "C" or "S" (taxed as a corporation) | Generally no |
| Any of the above, for legal services | Yes: attorneys' fees are reported even when paid to a corporation |
A few more rules decide the edge cases:
- Only business payments. Payments made in the course of your trade or business are reportable; personal payments aren’t.
- Services, not goods. Payments for merchandise, freight, storage and similar items are excepted. A supplier selling you materials is not a 1099 sub.
- Read the LLC carefully. “LLC” alone doesn’t tell you the answer; the letter after it does, and a single-member LLC owned by a person ticks “Individual/sole proprietor” instead. The W-9 for an LLC guide covers each case.
The January 31 deadline
Form 1099-NEC has one date for both copies: you furnish it to the sub and file it with the IRS by January 31, on paper or electronically. (Form 1099-MISC, for rents and other payments, still has a later filing date with the IRS.)
January 31 is a bad day to discover that a sub you paid $14,000 in May never sent a W-9. Work backwards: the list of who gets a 1099, with each name, classification and TIN, needs to be finished in early January, which means every W-9 needs to be on file by December. If the IRS later can’t match a name and TIN you filed, it sends a CP2100, and you’re into B notices and backup withholding. TIN matching before you file catches those first.
Why you still collect every W-9
A higher threshold means fewer 1099s. It doesn’t mean fewer W-9s, for three reasons:
- You don’t know the total in advance. A sub hired for one small job in March is often back for three more by October. The W-9 is easy to get on day one and hard to get after the work is paid.
- The W-9 is how you know the sub’s classification, and so whether they get a 1099 at all. Without it, you’re guessing from the business name.
- Backup withholding starts from the request, not the total. A sub who hasn’t given you a TIN when you ask is subject to it on reportable payments. How to request a W-9 covers the ask.
How TrackMyVendor automates this
- The W-9 is collected at onboarding, through the same secure link as the certificate of insurance and the license.
- The tax classification is read off each W-9, with the name, business name, TIN type, full TIN and address, so you can tell a corporation from a sole proprietor without opening the PDF.
- In January, the 1099 sheet lists every sub with those details from their newest W-9, and says “No W-9 on file” next to anyone still missing one. Account owners download it.
The sheet doesn’t know what you paid each sub: totals and the $2,000 test come from your accounting system. TrackMyVendor doesn’t prepare or file 1099s.
Start collecting W-9s freeReady for 1099 season before it starts?
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Frequently Asked Questions
What is the 1099 threshold for 2026?
Do I need to send a 1099 to a subcontractor I paid less than $2,000 in 2026?
Do corporations get a 1099-NEC?
When is Form 1099-NEC due?
Does the $2,000 threshold apply to backup withholding too?
This guide summarizes the IRS instructions for Forms 1099-MISC and 1099-NEC (December 2026 revision) as of November 2026. It isn’t tax advice: thresholds can change and some payments have their own rules, so ask your accountant about a specific payee.