Income Reporting Threshold Has Changed for Many Small Business Owners

September 8, 2026 - 10:53

Small business owners and independent contractors should take note of a key change in how certain income gets reported to the IRS. The reporting threshold for some 1099 forms has moved up for the first time in decades.

Courtney Kincaid, CEO and President of the Indiana CPA Society, explains that the old $600 threshold for certain 1099 forms has now increased to $2,000. This marks the first adjustment in many years. However, Kincaid stresses that this change does not mean income below $2,000 is exempt from taxes. The IRS still expects taxpayers to report all income, regardless of whether a 1099 form is issued.

The shift mainly affects how much paperwork businesses must send out and how the IRS tracks payments. For example, if a business pays a contractor less than $2,000 in a year, that payment may no longer trigger a 1099 form. But the contractor is still legally required to declare that income on their tax return.

Kincaid advises small business owners to review their payment records and talk to a tax professional if they have questions. The new threshold applies to certain forms, but not all. Some payments, like those for rent or legal services, may still follow older rules. Staying informed can help avoid surprises during tax season.