If you paid a subcontractor for work in 2026, the rule for when you owe them a 1099-NEC just changed. The IRS threshold moves from $600 to $2,000 for payments made this calendar year. After 2026, it adjusts for inflation.
That means a sub you paid $900 for a one-day job in March doesn’t get a 1099-NEC from you this January. Paid the same sub $2,100 across the year? They do.
What doesn’t change: you should still collect a Form W-9 from every sub before you cut the first check, regardless of how much you expect to pay them. If a sub won’t give you a correct taxpayer ID number, you’re required to backup-withhold 24 percent from their payment. Getting the W-9 up front is still the easiest way to never think about this again.
The bigger question hanging over 2026: how a “subcontractor” gets defined in the first place. The Department of Labor’s 2024 independent-contractor rule is no longer being enforced in investigations, and DOL proposed in February 2026 to rescind and replace it with a different economic-reality test. As of late July, there’s no final rule, so this is genuinely in flux. The IRS’s own common-law test, which looks at behavioral control, financial control, and the relationship between the parties, hasn’t changed and still applies regardless of what DOL does.
If you’re not sure whether someone working for you is a sub or should be on payroll, that uncertainty is the DOL rule’s fault, not yours. Either side of a working relationship can file IRS Form SS-8 to get an official determination if it matters enough.
Practical takeaway: Collect a W-9 before the first check on every job, every sub, no exceptions. Track running totals per sub through the year so you’re not scrambling in January to figure out who crossed $2,000.
Local relevance: Northwest Arkansas has a high share of small subcontracting outfits, tile subs, punch-list crews, one- or two-person specialty trades, who get paid in amounts that used to guarantee a 1099 and now might not. Fewer 1099s doesn’t mean fewer tax obligations for the sub; it just changes GCs’ paperwork.
For the full federal compliance chapter, EIN, estimated taxes, SE tax, W-4/I-9, OSHA reporting, all source-linked, see The NWA Trade Guide’s contractor directory.