The IRS Raised the 1099 Threshold to $2,000: What a Self-Managing Landlord Needs to Know

Published July 25, 2026

The federal threshold for issuing a contractor a 1099-NEC jumped from $600 to $2,000 for 2026 payments. Here is what that means for a self managing South Bay landlord.

If you self manage and pay contractors directly, the dollar amount that triggers a Form 1099-NEC just moved. Per the IRS instructions for Forms 1099-MISC and 1099-NEC, the reporting threshold rises from $600 to $2,000 for payments made starting in the 2026 calendar year. That is a real change, and it is worth understanding exactly what it does and does not let you skip.

What actually changed

For years, any landlord who paid an unincorporated contractor, an individual, or most LLCs $600 or more in a calendar year for work on a rental had to send that person a Form 1099-NEC and file a copy with the IRS. The IRS's own instructions now state that for tax years beginning after 2025, the minimum threshold for these information returns increased to $2,000, with inflation adjustments starting in calendar year 2027. That change came out of the One Big Beautiful Bill Act, the tax law signed in 2025.

So the mechanics did not change. You still owe a 1099-NEC to any unincorporated person or business you paid for services on your rental property, in the course of your rental activity. What changed is the floor. Under the new rule, you do not have to issue one until you have paid that contractor $2,000 or more in the year, not $600.

Which year this applies to, and why I am being careful here

This is the part I want to be precise about, because getting it wrong has real consequences. The $600 threshold still governs payments made during 2025. The $2,000 threshold applies to payments made in 2026 and after. If you paid a handyman $900 in November 2025, that is a 2025 payment on the old $600 rule, and a 1099-NEC was still required, due to the contractor and the IRS in early 2026. If you pay that same handyman $900 across 2026, the new $2,000 threshold means you are not required to file one for that payment.

I am stating this as I read it directly from the current IRS instructions, but a threshold and effective date like this is exactly the kind of thing a CPA should confirm against your specific filing year before you rely on it. Don't take my summary as the final word on your own return.

Who this actually helps

If you self manage a single rental or a small handful of units in the South Bay, this mostly helps with the smaller, one off jobs. A landscaper you pay $150 a month lands well under $2,000 for the year, plumbing repairs that run a few hundred dollars here and there, a handyman call for a leaky faucet. Under the old $600 floor, several of those small jobs from the same person over a year could stack up past the threshold fast. Under the $2,000 floor, more of that ordinary maintenance spend stays below the line.

It does not help nearly as much if you use the same contractor repeatedly for bigger jobs. A roofer, a general contractor doing a unit turn, or a plumber you call every time something breaks can still clear $2,000 with you well before December, and once they do, the filing requirement is the same as it always was.

One thing the threshold does not change

Raising the reporting threshold does not touch whether the payment is deductible. You can still deduct what you pay a contractor for repairs, maintenance, or improvements on a rental regardless of whether you were required to send them a 1099. The 1099 threshold is about your information reporting obligation to the IRS, not about what counts as a legitimate business expense. Keep your invoices and proof of payment either way. If you are ever audited, the paper trail is what backs up the deduction, not the presence or absence of a 1099.

The other thing that does not change: if you withheld any federal income tax from a contractor payment, for any reason, you generally still have to file a 1099-NEC for that payment no matter how small it was.

What I would actually do

Keep a running total per contractor per calendar year, the same way you should have been doing under the old rule. A simple spreadsheet with the contractor's name, each payment date and amount, and a year to date total tells you exactly where you stand against the $2,000 line without having to reconstruct it from bank statements in January. Get a completed W-9 from any contractor before you pay them the first time, not after you realize you are close to the threshold. That way you already have their taxpayer ID and entity type on file if a 1099 does end up required.

If you are not sure whether a specific contractor or entity type is exempt, most corporations are, most individuals and single member LLCs are not, ask a CPA before you assume either way. The cost of confirming is small. The cost of an IRS notice for a return that should have been filed is not.

Common questions

Does the $2,000 threshold apply to payments I made in 2025? No. Payments made during 2025 are still governed by the $600 threshold. The $2,000 threshold applies to payments made in the 2026 calendar year and after, based on the current IRS instructions. Confirm with a CPA before filing your 2025 returns.

Do I still need a W-9 from every contractor if the threshold is higher now? Yes, I would still collect one before the first payment. You will not always know in January whether a contractor will clear $2,000 by December, and having their information on file already saves you from chasing it down under deadline pressure later.

Does this change apply to corporations I hire? Generally, payments to C corporations and S corporations were already exempt from 1099-NEC reporting before this change, with limited exceptions like payments to attorneys. That part of the rule did not change. Confirm the entity type of anyone you pay before assuming they are exempt.

Last verified: July 25, 2026. This is general information for property owners, not tax advice. Confirm your specific situation with a CPA.

Kellie

Schofield Properties

323 Richmond Street, El Segundo, CA 90245

Topics: self-management, taxes, contractors, landlord-guide

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Schofield Properties is a family run property management company at 323 Richmond St, El Segundo, CA 90245. We have managed the South Bay since 1972 and personally oversee about 186 doors today. Book a call to talk about your property.