The One Big Beautiful Bill Act (OBBBA) introduces a significant adjustment to longstanding IRS reporting rules, advises DunlapSLK, a CPA and business advisory firm based in Chalfont.

Most notably, starting with payments made in 2026, the minimum threshold for issuing information returns like Form 1099‑NEC (and 1099‑MISC) will jump from a mere $600 to a more realistic $2,000 — an increase long overdue given inflation and economic growth. From 2027 onward, this $2,000 threshold will be indexed for inflation.

Under current rules, any independent contractor or recipient earning more than $600 must receive a 1099‑NEC, and businesses must file it with the IRS by Jan. 31, followed by a copy to the individual by the same date. With the new threshold, businesses hiring freelancers for, say, $650 in 2025 still must issue a 1099‑NEC — but, come 2026, they won’t need to unless payments exceed $2,000.

This change aims to reduce paperwork, simplify compliance, and alleviate administrative burdens for small businesses. However, even if payments fall below the threshold and no 1099 is issued, recipients are still legally obligated to report that income on their tax returns — and businesses must continue maintaining meticulous records.

Additionally, the bill reverses recent expansions in the Form 1099‑K reporting requirements — reinstating the former threshold of $20,000 and 200 transactions, undoing the lower thresholds phased in under the American Rescue Plan Act.

Together, these adjustments reflect a more business-friendly stance — lessening filing burdens and aligning reporting requirements with modern economic realities.

Learn more about this game-changer for business payment reporting from DunlapSLK.