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The 1099-NEC Threshold Is Now $2,000: What NJ and NY Contractors Need to Know
If you run a construction company or work as a general contractor in New Jersey or New York, the 1099 rule for your subcontractors changed this year. And it's not the number you remember.
What changed
For years, you issued a Form 1099-NEC to anyone you paid $600 or more for services. For payments made after December 31, 2025, the IRS threshold is $2,000.
Get it wrong in either direction and it costs you. File too many and you waste time. Miss one you needed to file and you risk penalties.
What to do now
Track what you pay each sub this year as a total per person, not per job.
Anyone you paid $2,000 or more for services in 2026 generally gets a 1099-NEC.
Get a W-9 before the first payment, not in January when everyone is scrambling.
Mark the deadline. Forms 1099-NEC go to your subs and to the IRS by January 31. When that date falls on a weekend, the deadline moves to the next business day, which puts the 2026 forms on February 1, 2027.
A quick example
Say you paid a drywall sub $1,800 this year and an electrician $14,500. Under the new rule, the electrician gets a 1099-NEC and the drywall sub likely doesn't.
You still keep the records for both. Your books need to show every payment, whether or not a form goes out.
One thing that didn't change
A higher threshold doesn't change whether someone is really a contractor or an employee. That is a separate question, and it depends on how the work is controlled and paid. If you are unsure about a worker, do ask before year-end.
If your sub list needs cleaning up before January, our bookkeeping and tax preparation services can get your 1099s organised and filed on time.
Wealth DiversiFined is a tax and business concierge firm at 58-84 Norfolk St, Suite 14, Newark, NJ 07103. We help entrepreneurs, professionals and growing businesses across New Jersey and New York with formation, bookkeeping, tax preparation and tax planning. Call 862-332-0721 or book online.
This post is general education only. It is not tax or legal advice for your situation. Do speak with your own tax professional or attorney before acting on it.
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