Tax Planning
Maximizing Savings with the New $2,000 Reporting Threshold Under the One, Big, Beautiful Bill
How the higher reporting threshold (from $600 to $2,000) affects self-employed, gig workers, and clients sending you Forms 1099-MISC/NEC—and how to adapt now.
By NomadicTax Research Team • 5-8 min read • June 2, 2026
## What Changed in Reporting Thresholds
Under the **One, Big, Beautiful Bill** (OBBB), payments made in trade or business subject to reporting under section 6041(a) (e.g. payments on Form 1099-MISC or 1099-NEC) **now have a threshold of $2,000 annually per payee**, up from the previous $600. This also applies to gambling winnings on Form W-2G. Payments below $2,000 need not be reported, effective for payments made after **December 31, 2025**. ([irs.gov](https://www.irs.gov/irb/2026-19_IRB?utm_source=openai))
The statutory change requires updates to regulations: proposed amendments will align regulatory thresholds with the new law. ([irs.gov](https://www.irs.gov/irb/2026-19_IRB?utm_source=openai))
## Who’s Most Affected
- **Freelancers, gig workers, side hustlers** receiving many small payments—these payments may now fall below reporting thresholds.
- **Businesses, platforms, or clients** that issue Forms 1099-NEC, 1099-MISC, W-2G—they may no longer need to file forms for payees with payments between $600 and $2,000, reducing reporting obligations.
- **Payers (e.g., gambling entities)** who issued many small reward-payments between $600 and $2,000: now many of those are exempt from reporting and withholding rules.
## Strategies for Tax Planning & Compliance
- **Keep accurate records even if reporting isn’t required.** The income is still taxable—even if payers don’t issue forms—and payees must report it on their federal returns.
- **Platforms or gig-economy businesses** should audit their payment flows to identify payees near or above the new threshold. If previously they reported many small amounts (like $600-$1,800), these may now avoid reporting obligations, but withholding obligations remain for applicable payers.
- **Revisit your contracts or payment schedules**: splitting payments across payees or entities cannot be used to evade thresholds. Synthetic packaging of payments could draw IRS scrutiny under anti-avoidance rules.
## Examples
> **Example 1 – Freelancer:** Jane, a photographer, contracts with several clients and earns $1,800 from Client A in 2026. Under the old $600 threshold, Client A would have issued her a Form 1099-MISC. Now, because $1,800 is less than the new $2,000 threshold, Client A is **not** required to issue a 1099. Jane still reports the income in full on her Schedule C.
> **Example 2 – Gambling Entity:** A small casino issues many W-2Gs for slot machine winnings of between $700 and $1,800. Now they only need to issue W-2Gs for payees who win **more than $2,000** in a calendar year. But the casino should confirm if winnings hit that threshold.
## Compliance Tips for Businesses and Payers
- Modify your expense/payment tracking systems to flag payees crossing the $2,000 threshold; even if forms aren’t issued, income remains taxable.
- Update internal policies for backup withholding, which may still apply in certain cases regardless of reporting thresholds.
- Monitor the final regulations: the proposed regulations under OBBB are expected to update regulations explicitly to reflect statutory thresholds and provide clarity on ambiguous cases. ([irs.gov](https://www.irs.gov/irb/2026-19_IRB?utm_source=openai))
## Implications & Risks
- Missed reporting by payers could lead to IRS notices, but failure to issue a 1099 when not required is less risky than issuing when required.
- Payees may forget to report income that is not backed by information returns; consistent self-monitoring of bank deposits and 1099s from other sources is important.
## Actionable Steps You Should Take Now
1. **For individuals/self-employed:** review all 2026 payments—even those without 1099s—and include them in your gross receipts.
2. **For businesses/payors:** implement updated tracking, revise accounting or payroll software settings.
3. **For tax practitioners:** educate clients in the gig economy and small vendors about the change, keep them from underreporting.
4. **Stay aware of proposed regulations** for more clarity—comments on the proposed regulations due by **June 12, 2026**. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
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By understanding and adapting to the higher $2,000 threshold, both payers and payees can reduce administrative burdens while maintaining compliance and avoiding pitfalls.