New 1099 Reporting Thresholds for 2026: What Massachusetts Business Owners Need to Know

The dollar amount that triggers a 1099 filing had not moved since the 1950s. That changed under the One Big Beautiful Bill Act, and the new thresholds apply for the first time to payments made in 2026. If your business pays contractors, vendors, or uses a payment platform to collect from customers, this affects your year end paperwork either way.

What Changed for 1099-NEC and 1099-MISC

The threshold for filing Form 1099-NEC and Form 1099-MISC rises from $600 to $2,000, effective for payments made after December 31, 2025. In practical terms, a business that pays a contractor $1,800 over the course of 2026 no longer needs to file a 1099-NEC for that relationship. Payments made in 2025 still fall under the old $600 rule, so this year’s filings, due at the end of January, are not affected.

• The $2,000 threshold applies to the total paid to a single recipient across the calendar year, not to any individual payment
• Starting with payments made in 2027, the threshold will be adjusted annually for inflation, rounded to the nearest $100
• The change applies to both Form 1099-NEC, used for contractor and freelancer payments, and Form 1099-MISC, used for rent, legal settlements, prizes, and similar payments

What Changed for 1099-K

Form 1099-K reporting had been through several years of proposed changes, phased in thresholds, and delays. The OBBBA settled the question by restoring the original rule. Third party payment platforms and marketplaces only need to issue a 1099-K when a recipient’s gross payments exceed $20,000 and the number of transactions exceeds 200 in the calendar year. Both conditions have to be met.

This rolls back a lower threshold that had been scheduled to phase down toward $600 with no transaction minimum. That lower threshold never fully took effect, and the higher $20,000 and 200 transaction rule is retroactive to 2022.

The Massachusetts Wrinkle

This is the part that gets missed most often. Several states set their own 1099-K threshold independent of the federal rule, and Massachusetts is one of them. Massachusetts has maintained a state level reporting threshold of $600 for third party settlement organizations, separate from whatever the federal threshold happens to be.

In practical terms, a Massachusetts business owner or a Massachusetts resident receiving payments through a platform like PayPal, Venmo for business, or Square could still receive a 1099-K at the lower state threshold, even though the federal $20,000 and 200 transaction rule technically applies at the federal level. State conformity to federal thresholds is inconsistent across the country, and this is exactly the kind of detail that is easy to miss if you are reading general OBBBA coverage that is not written with Massachusetts in mind.

What This Means for Your Business

• You will likely issue fewer 1099-NEC and 1099-MISC forms for 2026 payments, which reduces year end administrative work
• You still need a signed W-9 on file for every contractor and vendor, since you will not know whether a relationship crosses $2,000 until the year is over
• All income remains taxable whether or not a 1099 is issued. A higher filing threshold changes paperwork, not what your contractors owe on their own returns
• If your business uses payment platforms to collect from Massachusetts customers, do not assume the higher federal 1099-K threshold means no forms will be issued

What to Do Before Year End

• Pull your accounts payable records and identify which vendors fell between $600 and $2,000 last year, so you know the scope of the change for your business
• Decide whether you want to keep issuing 1099s below the new threshold voluntarily. Some businesses choose to for their own recordkeeping, even when not required to file
• Confirm your bookkeeping software or accounts payable process is updated to track the new threshold rather than flagging every vendor at the old $600 mark
• If you operate in multiple states, check whether any state you do business in has its own threshold that does not follow the federal change, the same way Massachusetts does

A Common Misconception

Raising the threshold does not mean smaller payments disappear from anyone’s tax return. A contractor who is paid $1,500 and does not receive a 1099-NEC still has to report that income. The change reduces how much paperwork changes hands, not what is owed. If your bookkeeping already tracks vendor payments accurately, this change mostly means less clerical work at year end rather than a shift in your tax position.

Questions We Are Hearing From Clients

Do I still need a W-9 from every contractor, even small ones? Yes. You will not know at the start of the year whether a relationship will cross $2,000 by December, so collecting a W-9 before the first payment remains the safest practice regardless of the expected total.

If I paid a vendor $500 in 2025 and will pay them again in 2026, do the years combine? No. Each calendar year is measured separately. A vendor paid under $600 in 2025 and under $2,000 in 2026 would not trigger a filing in either year under the respective rules in place for that year.

Does this change apply to payments to corporations? Payments to most corporations were already exempt from 1099-NEC reporting before this change, with a few exceptions such as payments to attorneys. That exemption structure has not changed.

If you are not sure how these changes apply to your specific vendor list or your payment platform activity, this is worth a conversation before year end rather than after your 1099s are already due.

Our bookkeeping services keep vendor records and payment totals current throughout the year, which makes this kind of threshold change far easier to track.

For the broader set of changes under the new law, see our earlier article on how the OBBBA changes the game for businesses.

Not sure how the new 1099 thresholds apply to your business?

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