10 OBBBA Considerations

In celebration of our 10th anniversary, we're sharing 10 ways OBBBA will affect the reporting threshold for 1099-MISC and 1099-NEC forms.

1. Higher threshold

Beginning for payments made in 2026, the threshold for 1099‑NEC or 1099‑MISC rises from $600 to $2,000.

2. Indexing for inflation in the future

The new $2,000 threshold for 1099‑NEC / MISC will be adjusted for inflation in years after 2027.

3. New reporting for “qualified tips”

The law contemplates new reporting formats for qualified tips and overtime, which will affect how payroll systems integrate these amounts.

4. No changes to 2025 W‑2 returns

For tax year 2025, there will be no changes to Forms W‑2, existing 1099 forms, Form 941, or withholding tables, notwithstanding OBBBA.

5. Income remains taxable even if no 1099 is issued

The absence of a 1099 does not relieve the recipient of the obligation to report all their income.

6. Fewer small‑dollar 1099s

Many small payments under $2,000 will no longer require 1099 issuance, reducing administrative burden.

7. System updates required

Accounting, payroll, AP/GL, vendor payment systems all need to be updated to reflect new thresholds.

8. Local differences

Some states may not conform fully to the federal changes.

9. Reduced risk for low amounts

Since fewer small-dollar 1099s will be mandated, payors are less likely to incur penalties for failure to file small amounts.

10. Audit importance increases

Because the threshold is higher, when a 1099 is issued (for $2,000+), proper documentation is key because those forms carry greater significance.