IRS Raises 1099 Reporting Threshold to $2,000 Starting in 2026

Independent contracting is expanding in the United States, with about 11.9 million workers—7.4% of the workforce—classified as independent contractors in their primary job in 2023. While 1099 work can offer greater flexibility, it requires workers to manage taxes typically handled partly by employers, and income remains taxable even when no form is issued. Beginning in 2026, the IRS raised the reporting threshold for Forms 1099-NEC and 1099-MISC from $600 to $2,000 per payee, reducing paperwork for businesses without eliminating workers’ tax obligations. The Labor Department has also proposed making it easier for businesses to classify workers as contractors by emphasizing control over work and opportunities for profit or loss, potentially reducing employer costs for payroll taxes, unemployment insurance and benefits.