OBBBA Brings Relief to Form 1099 Reporting
Published on by Mary Dieble in Tax Services
The One Big Beautiful Bill Act (OBBBA) relieves the filing requirements for certain 1099 forms used to report various types of income. These include:
- Form 1099-MISC: for reporting miscellaneous income,
- Form 1099-NEC: for reporting non-employee compensation, and;
- Form 1099-K: for reporting payment card and third-party network transactions.
As of July 4, 2025, these changes overturn the provisions for Form 1099s laid out in The American Rescue Plan Act (ARP) of 2021, increasing the reporting thresholds and/or adjusting requirements for the three categories.
Increasing the threshold
Under the previous law, businesses were required to file Form 1099-MISC or Form 1099-NEC for payments of $600 or more in a taxable year to a non-corporate recipient. With The OBBBA passed, the reporting threshold for these two forms has been increased from $600 to $2,000 for payments made in years beginning after December 31, 2025, and will be inflation-adjusted beginning with the first calendar year after 2026.
This will significantly reduce the number of 1099s businesses must file for miscellaneous income and non-employee compensation, ideally making tax season simpler for business owners across the country.
A return to ‘de minimus’
“Third party network transactions” refer to payments processed through third party settlement organizations such as payment apps and/or online marketplaces, an increasingly common practice for businesses and individual sellers alike.
Prior to ARP, Form 1099-Ks operated under “de minimus” rules, considering most minor transactions too small to require reporting. The requirement to report payments via Form 1099-K was not triggered until the dollar amount of transactions exceeded $20,000 and the number of transactions exceeded 200. The 2021 Act replaced these thresholds with a single threshold of $600 in aggregate payments, regardless of the number of transactions.
Such a significant shift in reporting requirements caused widespread confusion, especially for casual sellers using apps like Etsy, eBay, and Poshmark.
IRS delayed rollout
In 2022 and 2023, the IRS postponed the new law’s rollout to clarify the rules and give payment platforms time to prepare. The IRS again considered 2024 and 2025 transition years and delayed implementing the $600 filing threshold, but implemented 1099-K filing thresholds of $5,000 (2024) and $2,500 (2025) with no transaction limit. 2025 had been designated as the final transition year before the $600 filing threshold would come into effect in 2026.
The OBBBA reinstates the de minimis reporting thresholds replaced by the provisions of ARP or in effect, repeals the revision to the filing thresholds of that Act as if the changes were never enacted. This significantly reduces the number of small payments required to be reported by third-party networks.
Ultimately, all these changes to Form 1099 reporting aim to reduce the number of required forms and complexity of returns. The OBBBA provisions not only increase the threshold for miscellaneous and non-employee compensation but also restore and make permanent the de minimis rules for reporting third party transactions to thresholds which exceed $20,000 and 200 total transactions. While the changes won’t adjust any limits for the upcoming filing year, we will likely start seeing the ripple effects of the threshold increases before the 2027 tax season.
Looking for more?
If you have questions about Form 1099 reporting under the OBBBA, contact us today for a free consultation. Our team of top tax pros is always here to help.
You may also be interested in our coverage of wide-ranging tax changes brought by the OBBBA, including an overview of the impacts on both businesses and individuals, qualified business income, estate and gift tax planning, research and experimentation credits, and much more in our ever-expanding OBBBA library.
