Big Relief for Small Payments: One Big Beautiful Bill Act 1099 Reporting Changes

With the passage of the One Big Beautiful Bill Act on July 4, 2025, Congress made long-awaited and significant updates to the federal Form 1099 information reporting rules. These changes adjust long-standing reporting thresholds and reduce paperwork for businesses. Here’s what’s new, how it compares to the old rules and why it’s a win for your business.

Previous 1099 Reporting Rules vs. New Rules in The OBBBA

1. Form 1099-NEC / 1099-MISC for Reporting for Contractors and Freelancers

Old rule: Most payments made to an independent contractor, freelancer or vendor of $600 or more in a year required sending a Form 1099.
New rule (starting 2026): The threshold is now $2,000, and it will be indexed for inflation beginning in 2027.

2. Form 1099-K for Third-Party Payment Transactions

Old (but never fully implemented) rule: Starting in 2023, platforms like PayPal, Venmo and Etsy would have had to issue Form 1099-K for anyone receiving over $600, even for personal sales or reimbursements.
New rule: The OBBBA permanently restores the original Form 1099-K thresholds, meaning that payment processors only need to issue a Form 1099-K if payments total over $20,000 and result from more than 200 transactions in a calendar year. This change was made retroactive to 2022.

What Does This Means?

These changes substantially reduce paperwork and compliance tasks associated with year-end 1099 filings. The OBBBA changes are expected to significantly reduce the number of 1099s issued and received. These changes may seem like a small tweak, but the impact is big.

What’s Not Changing

Deadlines: No changes are made to the existing deadlines.
Form W-9 collection is still important: Even if a payment ends up being less than the threshold, collecting tax ID information upfront remains a best practice for businesses.
State rules may differ: The OBBBA applies only to federal reporting. Some states have their own 1099 rules and may still require forms at lower thresholds.

The Bottom Line for Most Businesses

Fewer forms to issue.
Less time spent on year-end reporting.
A clearer, more modern standard.

Do you need help reviewing vendor payments or updating your accounting systems for the new rules? Let us know — we’re happy to help.