Key 1099 Reporting Changes in the ‘Big Beautiful Bill’

A change to the $600 reporting threshold is in both the House and Senate versions of the so-called “Big Beautiful Bill”.

The versions of the bill in both the House and the Senate call for the reporting threshold for 1099-NEC and most boxes on 1099-MISC to increase to $2,000 starting in 2026. This would then be indexed for inflation each year after that.

Two things to note:

1.      The legislation has passed the House but has not been voted on in the Senate. While this change to the 1099 reporting threshold is the same in both bills, the House and Senate disagree on other parts of the legislation. Until a final bill is passed and signed into law, nothing has changed.

2.      If passed, the change to $2,000 would be effective for 2026 calendar year, not 2025. This means, if it passes, you’d still use the $600 threshold for 2025 calendar year.

What’s the Impact?

The language in the bill references Section 6041(a). This covers most common transactions that are reported on Form 1099-NEC and Form 1099-MISC.

• Non-employee compensation (i.e. contract labor reported on Form 1099-NEC)
• Rent (box 1 of Form 1099-MISC)
• Medical and healthcare payments (box 6 of Form 1099-MISC)
• Gross proceeds paid to an attorney (box 10 of Form 1099-MISC)

Other forms you might need to issue, such as 1099-INT or 1099-DIV, are not affected by this proposal.

Form 1099-K Change

 Form 1099-K, issued by merchant processors on credit card transactions (think: the entity behind the scenes that handles the transaction) have always had a $600 reporting threshold. The other entities that issue Form 1099-K are third-party network payers (think: payment apps such as PayPal and Venmo). 

Historically, the reporting threshold for third-party network payers was 200 transactions and $20,000 processed. Legislation passed in 2021 called for the threshold to be $600. The potential new law calls for this to be reversed and the old threshold be put back in place.

 New Form 1098

 The legislation also calls for the creation of a new reporting form (presumably a Form 1098) to report interest received by a lender on auto loans. This is because the bill creates an itemized deduction for individuals who pay interest on auto loans in some circumstances. This reporting form will help facilitate that deduction.

IOFM will continue tracking developments on this and other 1099-related provisions. In the meantime, check out the full podcast episode of Jason Dinesen’s “Accounting in the Wild” podcast for more discussion and context.