Skip to content

The OBBB's Hidden Administrative Win: 1099 Threshold Increase

While much attention has focused on the major tax provisions in the Omnibus Budget Bill (affectionately known as the "One Big Beautiful Bill" or OBBB), there's a small provision tucked away that has tax professionals like us secretly celebrating.

What's Changing?

Starting in 2026, the threshold for filing 1099-NEC and 1099-MISC forms will increase from $600 to $2,000. This means you'll only need to issue 1099s to vendors, contractors, and service providers when payments total $2,000 or more during the tax year.

Why This Matters

For small business owners, particularly those in professional services who regularly hire contractors or consultants, this represents significant administrative relief. Consider a typical professional service firm that might work with:

  • Multiple freelancers for specific projects
  • Various consultants for specialized advice
  • Numerous service providers throughout the year

Under current rules, any vendor paid $600+ requires a 1099. This often means preparing dozens of forms each January, chasing down W-9s from vendors, and dealing with correction notices when information doesn't match IRS records.

The new $2,000 threshold could reduce the number of required 1099s for many businesses, freeing up time and resources for more productive activities.

Don't Celebrate Too Early

This change doesn't take effect until 2026 for payments. For 2025 the $600 threshold still applies.

What To Do Now

Since we're still operating under the current rules for the foreseeable future, September is the perfect time to:

  1. Audit your vendor files for signed W-9s from all contractors and service providers
  2. Verify vendor information in your accounting system matches their W-9s
  3. Mark vendors for 1099 reporting in QuickBooks or your accounting software
  4. Consider automation options like QuickBooks' built-in 1099 tracking

Taking these steps now will make your January 2026 1099 filing process much smoother.

Need Help?

At Monarch Tax & Advisory, we offer 1099 filing services for businesses that want to outsource this administrative task. We can also coach you through the process of gathering the necessary information and setting up your systems for efficient 1099 tracking.

While this change may seem minor compared to other tax provisions, for small business owners and their accountants, it represents a meaningful reduction in administrative burden, and that's something worth celebrating.
,

Comments