1099 threshold rises to $2,000: what Oklahoma payers still owe

For payments made after December 31, 2025, the federal 1099 threshold for nonemployee compensation and several other everyday business payments is $2,000, up from $600. Congress made the change in P.L. 119-21 by amending 26 U.S.C. § 6041, and the IRS has carried the new figure into its current Instructions for Forms 1099-MISC and 1099-NEC.

Because the amendment applies to payments made after that date, returns reporting 2026 payments are, as we read it, the first ones filed under the new number. Form 1099-NEC is due on or before January 31 under the instructions, so the fourth quarter is a natural time to reset a vendor process.

We'd sort the change into nine points: three things that moved, four that didn't, and two that belong to Oklahoma alone. The last two are where we'd slow down, because the Oklahoma Tax Commission's own form still prints a different number.

What the new 1099 threshold changes

1. Nonemployee compensation now starts at $2,000

Nonemployee compensation is what a business pays for services to someone who isn't its employee. Under the IRS instructions, you file Form 1099-NEC for each person you paid at least $2,000 during the year for services in the course of your business.

The statute reads the same way. Section 6041(a) now reaches payments of "$2,000 or more in any calendar year," and the amendment note shows that figure replaced $600.

For a company with a long tail of small vendors, that's real relief. A one-time repair or a small design project that needed a form under the old figure may not need one now.

2. Several Form 1099-MISC boxes moved with it

Form 1099-MISC reports a list of other business payments. Its instructions now use at least $2,000 as the filing trigger for rents, prizes and awards, other income payments, medical and health care payments, and crop insurance proceeds.

Rent is the one we'd expect closely held companies to notice first. A business that pays an individual a modest amount for storage or parking space may find that payee drops out of its 1099-MISC run.

3. The number is built to move again

Section 6041(h) increases the dollar amount by a cost-of-living adjustment for calendar years after 2026, rounded to the nearest multiple of $100. The IRS instructions put it more cautiously, saying the amount may be adjusted for inflation beginning in calendar year 2027.

An indexed threshold has to be checked every year before the vendor report is run. Hard-coding a figure into accounting software is how a company ends up filing against last year's rule.

What didn't change for federal filers

4. Other thresholds stayed where they were

Not every box went to $2,000. The current instructions list these federal triggers, and the April 2025 revision we compared used the same figures:

• Royalties: at least $10.
• Gross proceeds paid to an attorney: at least $600.
• Direct sales of consumer products for resale: $5,000 or more.
• Fishing boat proceeds: any amount.

Attorney payments now split across two numbers. Attorneys' fees of $2,000 or more go in box 1a of Form 1099-NEC, while gross proceeds of $600 or more paid to an attorney go in box 10 of Form 1099-MISC.

Corporate payees have their own rule. Payments to a corporation, including an LLC treated as a C or S corporation, generally aren't reportable, but the instructions say that exemption doesn't apply to payments for legal services. Medical and health care payments to corporations stay reportable as well.

Card payments sit outside these forms altogether. Payments made with a credit or payment card, along with third-party network transactions, are reported on Form 1099-K and aren't subject to reporting on Form 1099-MISC or 1099-NEC.

5. The deadlines and the e-file rule

Form 1099-NEC is due to the IRS on or before January 31, whether you file on paper or electronically. Form 1099-MISC is due February 28 on paper or March 31 if filed electronically, and payee statements are generally due by January 31.

Paper is available to fewer filers than many owners assume. IRS Publication 1099 says you must e-file if you're required to file 10 or more information returns during the year, and that count doesn't apply separately to each type of form. The instructions trace the figure to T.D. 9972, effective for returns required to be filed on or after January 1, 2024.

The intake system is changing too. Publication 1099 says that beginning with tax year 2026, filing season 2027, the Information Returns Intake System (IRIS) will be the only intake system for information returns, and the older FIRE system won't be available for submissions. A company whose payroll provider or CPA firm transmits its 1099s may want to ask which system that transmitter uses.

6. Backup withholding and the W-9 file

Backup withholding is federal income tax a payer must hold back from reportable payments when the payee hasn't supplied a taxpayer identification number, or TIN, or has supplied an obviously incorrect one. An IRS notice that a TIN is missing or incorrect can start it too. The IRS gives the current rate as 24% of the payments you make to that payee.

The new threshold touches this rule without removing it. The instructions' What's New note says the minimum threshold amount for reporting certain payments "and/or perform backup withholding on those payments" increased to $2,000. Once you've withheld, though, the instructions call for a Form 1099-NEC or 1099-MISC for that payee regardless of the amount of the payment.

Exposure here belongs to the payer. IRS Publication 1281 says that if you don't collect backup withholding from affected payees as required, you may become liable for any uncollected amount.

In our experience, notices are how this usually surfaces. When a filed return shows a payee name and TIN that are missing or don't match IRS records, the IRS sends the payer a CP2100 or CP2100A notice, and for a missing TIN the notice page says to begin backup withholding immediately if you haven't already.

That's why, in our view, a Form W-9 belongs in every vendor file at onboarding, whatever the first invoice looks like. Nobody knows in January which vendors will cross $2,000 by December.

Record retention didn't shrink either. Publication 1099 says to keep copies of filed information returns, or the ability to reconstruct the data, for at least 3 years from the due date, and for 4 years if backup withholding was imposed.

7. The recipient still owes the tax

A reporting threshold is a rule about paperwork, not about what's taxable. The 1099 instructions note that some payments don't have to be reported on the form although they may be taxable to the recipient, and the IRS's guidance for gig workers says income must go on a tax return even if it isn't reported on an information return.

For a business, that cuts in two directions. Your smaller vendors may get fewer forms from you. Your own company is a payee too, and a customer's decision to stop sending a 1099 changes nothing about what you report.

The Oklahoma wrinkle: the OTC keeps its own rules

8. Oklahoma has a separate filing channel

The Oklahoma Tax Commission (OTC) publishes its own filing instructions for 1099s. Under a heading asking which 1099 federal forms are required to be filed with Oklahoma returns, its help center says a filer may need to submit one or more of eight listed 1099 forms, depending on the type of state return. Form 1099-MISC and Form 1099-NEC are both on the list, and the page gives two deadlines: January 31 for 1099-NEC and March 31 for the rest.

Filers have two routes. One is the IRS Combined Federal/State Filing program. The other is a file upload through a business OkTAP account.

Here's the part the OTC page spells out: 1099-NEC isn't part of the combined program and must be submitted directly to the OTC. A payer who relies on the combined program for everything else may still have a separate Oklahoma upload for its contractor forms.

Paper isn't an option on the state side. The OTC says it no longer accepts paper 1099s, and it points filers to IRS Publication 1220 for the file specifications. It also tells filers to keep their own copies, because they won't be able to obtain them from the OTC later.

To upload, the OTC says you'll need to know your Oklahoma withholding account ID, one more reason to keep Oklahoma withholding compliance and 1099 filing under the same roof. And the OTC notes that it may request these documents by letter.

9. Form 501 still prints its own dollar figures

Form 501 is Oklahoma's Annual Information Return, the summary return submitted to the OTC together with the underlying reports. The version on the OTC's website is marked revised 2025, and it doesn't use the federal number.

Under the heading for payments to residents, the instructions say payors should report interest, rent, dividends, annuities, gambling winnings and other fixed or determinable income when the payments amount to $750 or more in the calendar year. That $750 figure appears again for payments to nonresidents and for payments to professional individuals.

Smaller figures show up as well. The form's production payment rules say $10 or more for royalties, and corporations paying interest or dividends to individuals are told to report when the payments exceed $100.

Oklahoma's administrative code points the same direction. The copy of Rule 710:50-3-50 we read says Oklahoma law requires persons making payments totaling $750 or more annually to taxpayers to file a report, and that the report is to include payments required to be reported by the IRS unless the Commission specifically excludes them. The rule cites 68 O.S. § 2369(A).

Two details don't line up neatly, and we'd rather flag them than smooth them over. Form 501 gives a due date of February 28 of the succeeding calendar year, with January 31 for remitters withholding on nonresident royalty payments, while the help-center page gives March 31 for most 1099s. And as we read the 2025 form, its list of federal forms doesn't mention Form 1099-NEC, though the help center lists 1099-NEC among the forms a filer may need to submit.

Form 501 also states that it must be filed electronically. It tells participants in the combined program not to file it for 1099s they've already e-filed with the IRS.

So what does a payer do with an Oklahoma payment that falls under the federal line but over the figure printed on the state form? We won't guess at how the OTC will administer it. What the sources support is narrower: the Oklahoma form as revised in 2025 still states its own lower figure, and a payer should confirm the current Oklahoma requirement instead of assuming the federal number carries over.

Why fewer forms doesn't mean a thinner file

In our experience, the 1099 file is one of the first things requested in a worker-classification or payroll inquiry. The forms show who the company treated as a contractor and how much each was paid. The W-9s behind them show whether anyone asked the right questions at onboarding.

A higher threshold thins the stack of forms without changing the underlying question. Someone paid less than $2,000 can still be an employee, and the instructions reserve Form 1099-NEC for payments to someone who is not your employee. We've covered those tests in our piece on worker classification in Oklahoma.

Here's a pattern we see often: a company tracked its vendors only because a form was coming. Once the form goes away, the W-9 request and the vendor coding go with it. Then a notice arrives, or a contractor dispute becomes a wage claim, and nobody can show who was paid what.

A 1099 is the cover sheet. The vendor file is the report underneath it, and that's the part an examiner or an opposing lawyer reads.

Penalties still attach to the forms that remain

For information returns due in 2026, the IRS lists a charge per return of $60 if filed up to 30 days late, $130 if filed 31 days late through August 1, $340 after August 1 or if not filed, and $680 for intentional disregard. The IRS charges separately for the return and for the payee statement, and it says there's no maximum penalty for intentional disregard. When we read the page, its table stopped at returns due in 2026, so amounts for returns due in later years should be checked against the current IRS table.

There's a taxpayer-favorable side too. The IRS says it may remove or reduce a penalty if you acted in good faith and can show reasonable cause, which we discuss in our article on penalty relief and reasonable cause. Its backup withholding guidance also says a payer must make up to three solicitations for a TIN to avoid the penalty for leaving a TIN off an information return.

What a year-end vendor reset usually covers

None of this is advice for a particular company, but the resets we see tend to cover the same ground:

• Running the vendor payment report at the federal figure, and separately at whatever figure the OTC's current guidance gives for Oklahoma.
• Confirming a Form W-9 is on file for every active vendor, not only those over the line.
• Flagging attorneys and royalty owners, whose federal dollar triggers differ from the general $2,000 number.
• Asking whoever transmits the returns whether they file through IRIS and how the Oklahoma 1099-NEC upload gets done.

Less paperwork for small payments is a real benefit, and we don't think owners should hesitate to take it. Both agencies keep their tools, though. The IRS compares the names and TINs on the returns it receives against its own records, and the OTC can ask for documents by letter.

If a backup withholding notice is already on your desk, or the federal and Oklahoma figures seem to point in different directions for your business, we're glad to talk it through. You can reach us through the contact page or at our Oklahoma City office. A conversation early is almost always cheaper than a problem later.

This article is general information about Oklahoma, Texas, and federal law, not legal advice, and it does not create an attorney-client relationship. Facts matter; talk to a lawyer about yours.