What Nonprofits Need to Know About the New Form 1099 Reporting Thresholds

The One Big Beautiful Bill Act (OBBBA) includes significant updates to federal Form 1099 reporting requirements that will affect tax-exempt organizations, volunteer organizations, charitable foundations, chambers of commerce, and other nonprofit entities that engage independent contractors and service providers. Beginning with payments made after December 31, 2025, the reporting threshold for Forms 1099-NEC and 1099-MISC increases from $600 to $2,000 per payee annually, with inflation adjustments beginning in 2027.

For many nonprofit organizations, this change will reduce year-end filing requirements and administrative burden. However, organizations should not view the higher threshold as a reason to relax vendor compliance procedures.

Key Changes for Nonprofits – Form 1099-NEC and Form 1099-MISC

Under prior rules, most payments of $600 or more made to independent contractors and certain vendors required the issuance of a Form 1099. Beginning with payments made in 2026, reporting generally will not be required until cumulative annual payments reach $2,000. The threshold will be indexed for inflation beginning in 2027.

This change commonly impacts payments made by nonprofits to:

Organizations should review their accounting systems and accounts payable procedures to ensure reporting thresholds are updated appropriately for their 2026 filings.

What Isn’t Changing?

Although fewer Forms 1099 may be required, several important compliance obligations remain unchanged.

For nonprofit organizations that use online fundraising platforms, event registration systems or payment processing services, it is important to understand that Form 1099-K and Form 1099-NEC/MISC reporting are governed by different rules and thresholds.

Practical Considerations for Nonprofit Organizations

While the increase in the reporting threshold is expected to reduce administrative work, nonprofit organizations should use this transition as an opportunity to strengthen financial reporting and vendor management processes.

Organizations should consider:

This is particularly important for volunteer fire companies, foundations, chambers of commerce, membership organizations and other nonprofits that rely on volunteers or part-time administrative personnel to manage financial operations.

What Nonprofits Should Do Now

As organizations prepare for calendar year 2026 filing requirements, they should:

The Bottom Line

The increase in the Form 1099-NEC and Form 1099-MISC reporting threshold is a welcome relief for many nonprofit organizations. Fewer forms to prepare can mean less time spent on year-end compliance and more time focused on mission-driven activities. However, strong vendor documentation, accurate recordkeeping and effective internal controls remain just as important as ever.

Organizations that take the time now to update processes and educate staff and volunteers will be best positioned to benefit from the reduced reporting burden while maintaining compliance.