Here’s What Changed about 1099-NECs in 2026
Nothing in the business world is stagnant, and tax law is no exception. Congress recently changed the requirements for 1099-NEC (non-employee-contractors) payments, starting in 2026.
Here’s how the change affects you.
The basic process has not changed at all.
Contractors are people in your business who are not payroll employees. They are independent, usually operating their own business, and you're hiring them to do a project for your business. Or perhaps it's someone you already know, like a friend or family member, and they’re doing some service in your business. But again, they’re not actual employees.
With a contractor, you don’t get to designate timeframes, how they're performing the service, when they're performing the service, and you’re not giving them the tools. They really truly are independent from your organization.
When you hire a contractor, get a W-9.
The first thing you need to do when you hire a contractor is get a W-9. This form gives all the info you need in order to give them their 1099 in January. If you don’t get the W-9, then you won’t be able to give a 1099-NEC, and that puts you out of compliance. The liability falls on you as the business owner, just like if you failed to get a W-4 or forms of ID for an employee. In both situations, you really shouldn’t engage an individual unless you have the proper paperwork.
In the contractor world, getting a W-9 can feel like a second step. You hire them, they start working, then you realize you need to get this W-9. But really, if you have an actual contract with your contractor (and I highly recommend that you do), your W-9 should be included in that so it’s filled out as part of the onboarding process. And honestly, they shouldn’t be getting paid until you have that W-9 on file. Even better if you can share it with your bookkeeper or accountant so they have all the info early and can get it set up in the system.
So what changed about 1099s in 2026?
What has changed is the threshold. It used to be that you were required to provide a 1099 for any contractor whom you paid at least $600 by cash, check, or ACH throughout the year.
The new threshold is $2,000.
So in 2026, if you are going to pay an independent contractor at least $2,000 by cash, check, or ACH, then you need to send them a 1099 by January 31, 2027.
For many owners this comes as a relief, since it means fewer 1099s and less paperwork. No matter what it means for you, make sure you stay up-to-date on tax laws so you and your business can stay compliant.
If you have any questions about 1099s and independent contractors, feel free to reach out to me directly at jen@assignedfinancialsolutions.com. My team and I are happy to help!