Tax Bill Changes 1099 Reporting Thresholds
The “One Big Beautiful Bill Act” signed into law on July 4, 2025, makes two important changes to tax reporting requirements that should be of interest to employers. 1099 Reporting Threshold Increased to $2,000 and Indexed for Inflation Payments to non-employees for personal services must be reported on an “information return,” commonly called a Form 1099-NEC, if the payment is $600 or more in a calendar year. Similarly, payments of non-wages, such as for a settlement that includes penalties or emotional distress-type damages, are reportable on Form 1099-MISC if the payment is $600 or more. 1 Beginning in 2026, however, Section 70433 of the new Act increases the $600 threshold to $2,000, which will then be adjusted for inflation beginning in 2027 . In addition, requirements relating to backup withholding – required when the payee fails to provide a valid Form W-4 or Form W-9 using the taxpayer’s correct taxpayer identification number – will similarly be increased to $2,000 a...