The new 1099 reporting threshold increases from $600 to $2,000 for many payments made during 2026 and reported on Form 1099-NEC or Form 1099-MISC.
For nonprofits that regularly work with consultants, freelancers, and other independent contractors, this change may reduce the number of 1099s they need to prepare.
Here is what has changed, what has stayed the same, and what your nonprofit should be doing now.
When Does the New Threshold Apply?
The new $2,000 threshold applies to payments made during calendar year 2026. Those payments will be reported on Forms 1099 prepared in early 2027.
What Has Changed?
A nonprofit will generally be required to issue Form 1099-NEC when it pays an eligible nonemployee $2,000 or more for services during 2026.
For example, assume your nonprofit pays an independent graphic designer $1,500 during 2026. Under the previous $600 threshold, that amount would generally have required a Form 1099-NEC. Under the new federal threshold, it generally does not.
The $2,000 threshold also applies to certain payments reported on Form 1099-MISC. However, not every type of payment reported on that form follows the same threshold (e.g., royalties). Organizations should review the requirements for the specific types of payments they issue.
After 2026, the $2,000 threshold will be adjusted annually for inflation. This means the required reporting amount may increase in future years.
What Has Not Changed?
Your nonprofit should continue requesting a completed Form W-9 before making the first payment to a new vendor or contractor. Waiting until year-end to collect this information can lead to delays, incorrect forms, and unnecessary follow-up.
Form W-9 provides information your organization needs to evaluate its reporting responsibility. Collecting Form W-9 consistently helps maintain a reliable vendor file. The higher threshold does not make that process less important.
Payment Method Still Matters
Before preparing Forms 1099, nonprofits should review not only how much was paid, but also how each vendor was paid.
Payments made directly by check, ACH, cash, or similar methods may be included when determining whether the nonprofit has reached the applicable Form 1099-NEC or Form 1099-MISC threshold.
Payments made by credit card or through certain third-party payment networks are generally subject to separate Form 1099-K reporting rules. When those rules apply, the payment processor, rather than the nonprofit, is responsible for reporting the payment.
For example, if your nonprofit pays a consultant $2,500 entirely by credit card, it generally would not include that amount on a Form 1099-NEC issued by the organization. If the organization paid the same amount by check or ACH, it might have a reporting responsibility.
This is why clean bookkeeping matters. Your records should make it possible to identify the vendor, total payments made, and the payment method used.
What Should Your Nonprofit Do Now?
- Collect Form W-9 before paying new vendors. Do not wait to see whether payments eventually reach $2,000.
- Enter the vendor’s correct legal name and tax information into the accounting system. Avoid setting up the same vendor under multiple names.
- Track payments by vendor throughout the year. The threshold is based on total reportable payments made to the recipient during the calendar year, not the amount of each individual payment.
- Record the payment method accurately. This helps prevent credit card and certain third-party network payments from being reported twice.
- Review vendor activity before year-end. Confirm that Forms W-9 are complete and identify vendors approaching the reporting threshold.
- Check applicable state requirements. A state may have filing rules or thresholds that differ from the federal requirements.
The Bottom Line
The increase from $600 to $2,000 may reduce the number of Forms 1099 your nonprofit must prepare for 2026. However, it should not change how your organization collects vendor information, documents expenses, or maintains its accounting records.
The best approach is still to collect Form W-9 before the first payment, track payments by vendor and payment method, and review contractor activity throughout the year.
A higher filing threshold can make year-end reporting a little easier. Good records are what make it easier in practice.
This article provides general information and is not a substitute for advice based on your organization’s specific circumstances. Reporting requirements may vary depending on the type of payment, recipient, payment method, and applicable state law.
Need help staying ahead of deadlines and maintaining 1099-ready books? Stainless Book supports nonprofits with bookkeeping, compliance tracking, and Form 1099 preparation. Schedule a free consultation today.
