The New 1099 Filing Threshold: What Nonprofits and Churches Need to Know for 2026

If you thought you had your 1099 routine figured out, there’s a major update this year.
Starting with payments made in 2026 (filed in January 2027), the IRS is raising the 1099-NEC threshold from $600 to $2,000.

That’s a big shift—and while it will reduce paperwork, it doesn’t remove your responsibility for good recordkeeping and compliance.

If you missed my recent deep dive on working with contractors—including 1099s, W-9s, and the #1 mistake nonprofits make all the time— read the full contractor guide here.

What’s Changing and What’s Not

New 1099-NEC Threshold

You’ll now only need to issue a 1099-NEC if you pay a contractor $2,000 or more during the calendar year.

What Stays the Same

• Income is still taxable. Vendors must report all income, even if you don’t send a form.
• Recordkeeping still matters. Track all payments for audits and financial reporting.
• W-9s are still required. Collect them for every vendor before payment.
• Oversight is still essential. The rule simplifies reporting, not responsibility.

Why It Matters for Churches and Nonprofits

This update gives organizations breathing room by reducing administrative work and the risk of small-form errors. But it’s not a “set-and-forget” change. You still need systems in place to track, document, and communicate clearly with your team.

Think of this as a chance to simplify without slipping.

How to Prepare

1. Review Contractor Payments
   Run a report of everyone you paid in 2025. Note those in the $600–$2,000 range. This helps forecast who will—and won’t—receive 1099s under the new rule.
2. Update Your Policies and Software
   Keep collecting W-9s, and ensure your accounting system reflects the new $2,000 threshold once updates roll out.
3. Train Your Team
   Make sure staff and board members understand the change, especially anyone who approves payments or contracts.
4. Monitor Totals by Vendor
   Remember, the IRS looks at total annual payments, not individual checks. Avoid splitting invoices to stay under the limit.
5. Keep Audit-Ready Records
   Even if you don’t file a 1099, document every payment—date, service, approval, payment method, and W-9.

The Big Picture

This threshold change is a win for nonprofits—it streamlines reporting and reduces workload—but faithful financial stewardship still requires diligence and documentation.

As 1 Corinthians 4:2 reminds us:
“Now it is required that those who have been given a trust must prove faithful.”

Let’s lead with excellence—even when the rules get easier.

Next Steps

If your nonprofit or church wants help tightening systems and preparing for compliance updates like this, our team at Thrive Nonprofit Partners is here to help.

Start with our free resource, 5 Steps for Nonprofit Leaders to Thrive, or connect directly at terisaclark.com/you.