The forms businesses file in January 2027 report 2026 payments, and 2026 is the first year several 2025 law changes apply. Most of the work is in settings: vendor records, accounting software, and payroll. It is easier to fix those now than during the filing rush.
Form 1099-NEC and 1099-MISC: $600 becomes $2,000
For payments made after December 31, 2025, the general reporting threshold for Forms 1099-NEC and 1099-MISC rises from $600 to $2,000 per payee for the year. The backup withholding threshold follows it. The amount is indexed for inflation starting with returns filed in 2027. The change is described in Revenue Procedure 2025-32 (opens in a new tab) and the 2026 instructions for Forms 1099-MISC and 1099-NEC (opens in a new tab).
Not every threshold moved:
- Royalties are still reported at $10.
- Gross proceeds paid to attorneys are still reported at $600.
In practice:
- A contractor paid $1,500 in 2026 no longer needs a 1099-NEC. One paid $2,500 still does.
- The threshold applies to the year’s total per payee. A vendor paid $900 three times crosses it.
- Accounting software that flags 1099 vendors may still be set to $600. Check the setting before running the year-end report.
- Keep collecting W-9s from every vendor before the first payment. The threshold changes who gets a form. It does not change the need for a correct name and taxpayer ID, and getting a W-9 in January from a vendor you paid in March is hard.
Payments made by card or through a payment app are reported by the processor on Form 1099-K, not by the payer on a 1099-NEC. That rule has not changed.
Form 1099-K: back to $20,000 and 200 transactions
The phase-down to $2,500 for 2025 and $600 for 2026 is gone. The law retroactively restored the original threshold: a payment app or marketplace issues a 1099-K only when payments exceed $20,000 and 200 transactions for the year. The IRS Form 1099-K FAQs (opens in a new tab) cover the details.
Fewer forms do not mean less income to report. A business that sells through a marketplace reports all of its sales whether or not a 1099-K arrives. Reconcile marketplace payouts to gross sales, refunds, and fees in the books. A deposit is not a sale.
Form W-2: tips and overtime
The new deductions for tips and qualified overtime are claimed by employees for 2025 through 2028, capped at $25,000 for tips and $12,500 for overtime ($25,000 on a joint return). Employers supply the numbers. The 2026 Form W-2 instructions (opens in a new tab) add:
- Box 12, code TP: total cash tips reported to the employer.
- Box 12, code TT: total qualified overtime compensation. This is only the premium portion, the “half” in time-and-a-half, required by the Fair Labor Standards Act, not the whole overtime paycheck.
- Box 14b: an occupation code for tipped employees.
Form 1099-NEC has matching new boxes for tips and overtime paid to nonemployees.
The overtime figure is where payroll set-up matters most. Many systems record overtime as a single pay type at 1.5 times the rate. Reporting code TT means separating the premium from the base pay, and only for overtime the FLSA requires. Overtime paid under a more generous company policy or a state rule does not qualify. Ask the payroll provider now how they will calculate it, and whether the year-to-date numbers can be reconstructed if the set-up changes late.
Deadlines
- Form W-2 for 2026 wages is due to employees and to the Social Security Administration by February 1, 2027, because January 31 falls on a Sunday.
- Form 1099-NEC follows the same January 31 rule, so it moves to February 1, 2027 as well.
- Form 1099-MISC without nonemployee compensation is due to the IRS by March 1 on paper (February 28 is a Sunday) or March 31 if filed electronically.
Before December 31
- Update the 1099 threshold in the accounting system, and keep the $10 royalty and $600 attorney rules.
- Request W-9s from any vendor missing one.
- Confirm how payroll will report tips (TP) and qualified overtime (TT).
- Reconcile marketplace and processor payouts to gross sales.
General information as of October 2026, not advice for a specific situation.