2026 Forms 1099-MISC and NEC: Key Reporting Changes Ahead 

What’s Changing for 2026 

1. Reporting Threshold Jumps From $600 to $2,000 

For decades, a business had to issue a 1099-MISC or 1099-NEC once payments to a single recipient reached $600 in a calendar year. Under the new law, that threshold rises to $2,000 for 2026 payments, covering non-employee compensation, rents, and payments for medical and health care services, among other categories. The IRS has indicated the $2,000 threshold will begin adjusting for inflation starting in 2027. In practice, many small vendors, sole proprietors, and independent contractors who previously received a 1099 may no longer receive one, so organizations will need to update vendor files and accounts payable systems accordingly. 

2. New Boxes for Cash Tips 

The 2025 tax law also created new reporting obligations around cash tips. The draft instructions add Box 1b to Form 1099-NEC and Box 13a to Form 1099-MISC specifically to capture cash tips paid to non-employees. 

3. Separate Reporting for Overtime Pay 

Non-employee overtime compensation now gets its own line as well. Payers will report overtime paid to non-employees in a new dedicated box, in addition to including that amount within the total non-employee compensation or miscellaneous income figure. 

4. A New Code: Treasury Tipped Occupation Code (TTOC) 

Payers will also need to identify a payee’s occupation using a new Treasury Tipped Occupation Code (TTOC): Box 1c on Form 1099-NEC and Box 13b on Form 1099-MISC. The IRS will publish the list of applicable codes at www.irs.gov/TTOC. Organizations that pay tipped workers as independent contractors will want to build this lookup into their onboarding and payment processes. 

5. Golden Parachute Payments Move Forms 

Excess golden parachute payments, previously reported on Form 1099-MISC, move to Box 3 of Form 1099-NEC beginning with 2026 payments. 

What Organizations Should Do Now 

• Update payroll and accounts payable systems to reflect the new $2,000 threshold before year-end. 

• Review current 1099 vendor lists now – some recipients who received a form last year may fall below the new threshold in 2026. 

• Coordinate with payroll on capturing cash tips, overtime, and occupation codes for any non-employees paid through Form 1099-NEC. 
• Flag the golden parachute reporting change with executive compensation advisors, particularly for organizations anticipating a change in control. 
• Watch for the final IRS instructions – details could still shift before forms are due in early 2027. 

Final Thoughts 

These changes represent one of the more substantial updates to information reporting in recent memory. Because the IRS instructions are still in draft form, some details may shift before the forms are finalized, but the overall direction is unlikely to reverse. Organizations that update their systems and vendor records now will be in a much better position when reporting season arrives in early 2027.