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ComplianceOctober 28, 2026 · Paperhound

What changed in 2026 for W‑9s and 1099 reporting

Two things changed in 2026: the IRS has a new Form W‑9 revision in the works, and the reporting thresholds behind 1099s moved for the first time in decades. One is still a draft. The other is already law.

If you collect W‑9s from vendors, this year brought two separate changes worth knowing about. The IRS is working on a new revision of the form itself, and the One, Big, Beautiful Bill raised some of the dollar thresholds that decide when a payment gets reported and when backup withholding applies. The threshold change is the one that matters most for payables teams, because it is already in effect.

The form: a new revision, still in draft

The current official Form W‑9 is still the March 2024 revision. The IRS posted a first draft of a new revision in September 2025 (dated January 2026), then an updated draft in May 2026 with a June 2026 revision date. As of late October 2026 it has not been finalized - the copy on irs.gov is still the March 2024 revision, so check that page before building anything against the draft.

What the draft would change:

• Digital assets. A new checkbox in Part II lets certain U.S. digital asset brokers certify their status, and a new exempt payee code (14) covers digital asset transactions exempt from backup withholding through 2026. For most vendor relationships this changes nothing.
• Sole proprietors and disregarded entities. The January draft would have pushed many sole proprietors to give an SSN only; the June draft allows an SSN or the owner's EIN. A single-member LLC that is disregarded still reports its owner's TIN; if it has elected corporate status, it uses its own EIN.
• Clearer certifications. Part II items are separated with "or", making the alternatives easier to read.
• Updated thresholds in the instructions. The requester instructions now reflect the new $2,000 reporting threshold described below.

Just as useful is what the draft does not change. A W‑9 still does one job: it gives you the vendor's legal name, TIN, entity type and certification. The March 2024 form is the only valid revision until the IRS publishes the final one, and W‑9s your vendors already signed do not become invalid when a new revision appears.

The thresholds: already in effect

The 2025 law raised the reporting floor for business payments for the first time in decades:

• Payments reportable under sections 6041(a) and 6041A(a) - most Form 1099‑NEC nonemployee compensation and most Form 1099‑MISC categories such as rents and other income: the reporting floor is $2,000 (was $600) for payments made in calendar year 2026 and later, indexed for inflation from 2027.
• Not everything moved. Categories with their own statutory thresholds keep them - royalties on Form 1099‑MISC still report at $10, for example.
• Backup withholding: the $2,000 floor applies only to payments under those two sections that are subject to backup withholding. The triggers are unchanged - a missing or incorrect TIN, an IRS underreporting notice, or a certification failure - and other payment types keep their own withholding rules. This is not a universal "no withholding under $2,000" rule.
• Form 1099‑K: for third-party settlement organizations (payment apps and online marketplaces), reporting reverted to over $20,000 and over 200 transactions - both conditions together. Payment card transactions through a merchant acquirer have no minimum.

An example. Say you pay a freelance designer $1,400 in total during 2026. Under the old $600 floor you would have owed a Form 1099‑NEC; under the new one, no 1099‑NEC is required for those payments. You still want the designer's W‑9 on file - if the engagement grows past the floor, or backup withholding ever applies, you need their TIN already in hand, not chased in January.

Backup withholding still works on triggers, not just totals. The $2,000 floor moves when backup withholding applies, not whether it does. If a vendor never furnishes a TIN and your reportable payments to them cross $2,000 in a calendar year, the 24% backup withholding rules apply. The trigger has not changed: no TIN, withholding. Payments that follow their own reporting rules keep them.

And the threshold only decides whether you file a 1099; it does not change what counts as taxable income for the vendor.

What this means for vendor W‑9 collection

No need to re-collect. Nothing announced so far requires collecting new W‑9s just because a new revision is coming. Forms signed on the March 2024 revision generally stay valid unless the vendor's information changes. Have your tax advisor confirm this once the final form is out.

Fewer vendors will need 1099s. With the higher floor on typical vendor payments, many small vendors will fall below it. That shifts the main reason for collecting a W‑9 from filing toward documenting the vendor - and having their TIN on file so you are not left scrambling if they do cross the threshold or if backup withholding ever applies.

Plan for annual changes. From 2027 the threshold moves with inflation each year, so treat it as a configurable value in any product or process logic, not a fixed $2,000. The adjustment is published annually and rounded to the nearest $100.

Review any online or substitute W‑9 once the final version lands. When the final form and instructions are published, review your digital or substitute W‑9 against them and update as applicable - checking whether changes like the Part II checkbox, exempt payee code 14 and the SSN‑or‑EIN rule survived. Version your forms so you know which revision each vendor signed.

What to watch

• irs.gov/w9 for the final revision. The June 2026 date on the draft is a revision date, not an effective date - the form is final only when the IRS publishes it.
• The annual threshold adjustment each year from 2027, if your systems or templates hard-code the $2,000.
• Your own vendor master data. The vendors most affected are the small ones who will no longer cross the floor - which is exactly when a missing W‑9 turns up in an audit instead of a 1099 run.

This article is general information, not tax advice. For your situation, talk to your tax advisor.