Internal Revenue Service proposes updating its information reporting and backup withholding regulations to the new $2,000 threshold
As of our last check on November 2, 2026, this is a proposal, not a requirement. Comments closed June 16, 2026.
We check the Federal Register daily for later actions. We check federal court opinions for rulings on published rules weekly, on Mondays. A ruling can take time to reach us, so not finding one here does not mean there is none.
In short
- What changed
- The Internal Revenue Service (IRS) proposes to replace the old $600 reporting threshold in its regulations with the statutory threshold of $2,000 for 2026, adjusted for inflation in later years, for information returns and backup withholding. The proposal reflects changes Congress already made in the One, Big, Beautiful Bill Act.
- Who's affected
- Businesses that make payments in the course of their trade or business reported on Forms 1099-NEC, 1099-MISC, W-2G, and in narrow cases Form W-2, and payors that do backup withholding reported on Form 945. Casinos and other payors of gambling winnings are among the most affected.
- What to do
- This proposed rule creates no new duties for employers, and comments are due June 16, 2026. The IRS says the higher statutory thresholds already apply to payments made after December 31, 2025, regardless of this proposal, so payors may want to confirm their systems no longer use $600.
What changed
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From the sourceBackground, II. Section 6041
OBBBA section 70433(a) increased the $600 threshold in section 6041 to a base threshold of $2,000 for payments made after December 31, 2025.
Also: Background, II. Section 6041
Additionally, OBBBA section 70433(b) added section 6041(h), which provides that, for calendar years after 2026, this base threshold will be indexed to inflation.
The One, Big, Beautiful Bill Act raised the reporting threshold for payments in the course of a trade or business from $600 to $2,000 for payments made after December 31, 2025, and indexes it to inflation for calendar years after 2026.
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From the sourceExplanation of Provisions, II
these references ... would be replaced with a reference to an amount equaling or exceeding the dollar threshold in effect for the calendar year under section 6041(a) and (h)
The proposal would replace the $600 references in the information reporting and backup withholding regulations with a reference to the dollar threshold in effect for the calendar year.
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From the sourceProposed Sec. 1.6041-1(a)(3)
For payments made after December 31, 2025, and before January 1, 2027, the dollar threshold in effect for the calendar year under section 6041(a) is $2,000.
The proposal would define the threshold as $600 for payments before 2026, $2,000 for payments made in 2026, and $2,000 plus the inflation adjustment for payments after 2026.
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From the sourceProposed Sec. 31.3406(b)(3)-1(b)(3)(i)
only if the aggregate amount of the current payment and all previous payments to the payee during the calendar year equals or exceeds the dollar threshold in effect for the calendar year under section 6041(a) and (h)
Backup withholding on these payments would apply only once total payments to a payee in the calendar year reach the threshold in effect for that year.
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From the sourceSpecial Analyses, I.A
regulations under section 6041 provided that the dollar threshold was $1,200 for a single winning from bingo and slot machine play and $1,500 for a single winning from keno.
Also: Explanation of Provisions, II
the threshold for reporting payments of winnings from bingo, keno, and slot machine play is $2,000 for calendar year 2026
The reporting threshold for winnings from bingo and slot machines ($1,200) and keno ($1,500) would rise to $2,000 for 2026, adjusted for inflation later.
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From the sourceProposed Sec. 1.165-10(a)
a deduction is allowed under section 165(d) of the Internal Revenue Code for 90 percent of the amount of such losses during the taxable year, but only to the extent of the gains from wagering transactions during that year.
The proposal would also limit the itemized deduction for wagering losses to 90 percent of losses, and only up to wagering gains, matching the statute.
Who is affected
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From the sourceSUMMARY
These changes will affect persons who make payments in the course of their trade or business and those persons claiming a deduction for wagering losses.
The changes affect people who make payments in the course of their trade or business, and people who claim a deduction for wagering losses.
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From the sourceSpecial Analyses, I.C.2.a
the Treasury Department and the IRS estimate that 3.6 million payors are potentially affected by the statutory change and the clarity provided by these proposed regulations.
Also: Special Analyses, III. Regulatory Flexibility Act
approximately 98 percent are considered small entities with gross receipts under $40 million
The Treasury Department and the IRS estimate that 3.6 million payors are potentially affected, about 98 percent of them small entities.
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From the sourceSpecial Analyses, I.C.2.a
This situation applies in a narrow set of circumstances where withholding for social security and Medicare taxes is not required, such as for cases of foreign agricultural workers, election workers, and certain members of the clergy.
The Form W-2 effect is narrow: it covers pay where Social Security and Medicare withholding is not required, such as foreign agricultural workers, election workers and certain clergy.
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From the sourceSpecial Analyses, I.C.2.a
For the same tax year, more than 4,000 payors filed 17.3 million Forms W-2G reporting gambling winnings in the range between the old and new reporting thresholds, almost 80 percent of which were for winnings from slot machine play.
Payors of gambling winnings are heavily affected: more than 4,000 payors filed 17.3 million Forms W-2G in the range between the old and new thresholds for tax year 2024.
What it means in practice
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From the sourceSpecial Analyses, I.C.2.a
Because this is a change in the statute, these dollar thresholds apply regardless of these proposed regulations.
The IRS says the higher dollar thresholds come from the statute and apply regardless of this proposal.
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Our analysisSpecial Analyses, I.C.2.a
Some taxpayers and practitioners may apply the lower, outdated thresholds in the regulations despite the new, higher thresholds in the statutes.
Payors whose accounts payable or payroll systems still use the old $600 trigger may issue forms they no longer need to file. The IRS itself warns that some payors may keep applying the outdated thresholds.
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From the sourceSpecial Analyses, II. Paperwork Reduction Act
the Treasury Department and the IRS estimate that the higher reporting threshold will result in an overall reduction in filing burden of $982 million in 2024 dollars
The Treasury Department and the IRS estimate the higher threshold will cut filing burden by $982 million (in 2024 dollars) for tax year 2026 returns filed in 2027.
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From the sourceSpecial Analyses, I.C.2.a
Published draft Publication 1099, General Instructions for Certain Information Returns, for Tax Year 2026 already contains references to the statutory changes to the reporting threshold made by the OBBBA.
The draft 2026 General Instructions for Certain Information Returns (Publication 1099) already reflect the new threshold.
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From the sourceSpecial Analyses, III. Regulatory Flexibility Act
because they do not impose any new requirements on small entities but rather increase the threshold at which they are required to issue information returns
The IRS states the proposal imposes no new requirements on small entities and instead raises the threshold for issuing information returns.
What to do
Required
This is a proposed rule. It creates no requirement for employers until it is finalized. The higher thresholds it describes come from the statute, not from this proposal.
Worth considering
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Our suggestionSpecial Analyses, I.C.2.a
Because this is a change in the statute, these dollar thresholds apply regardless of these proposed regulations.
Consider confirming that accounts payable and payroll systems use the $2,000 threshold, not $600, when deciding which 2026 payments go on Forms 1099-NEC and 1099-MISC.
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Our suggestionProposed Sec. 31.3406(b)(3)-1(b)(3)(i)
only if the aggregate amount of the current payment and all previous payments to the payee during the calendar year equals or exceeds the dollar threshold in effect for the calendar year under section 6041(a) and (h)
Consider reviewing backup withholding settings so withholding starts when total payments to a payee in the year reach the threshold in effect for that year.
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Our suggestionProposed Sec. 1.6041-2(a)(1)
must also be reported on Form W-2 if the total of such payments and the amount of the employee's wages (as defined in section 3401), if any, required to be reported on Form W-2 equals or exceeds the dollar threshold in effect for the calendar year under section 6041(a) and (h)
If you pay workers whose pay is not subject to Social Security and Medicare withholding (for example, election workers or certain clergy), consider reviewing how your Form W-2 rules apply the $2,000 threshold.
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Our suggestionDATES
Electronic or written comments and requests for a public hearing must be received by June 16, 2026.
Consider submitting comments, or a request for a public hearing, by June 16, 2026 if the proposal affects your reporting.
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Our suggestionProposed Sec. 1.6041-1(a)(3)
For payments made after December 31, 2026, the dollar threshold in effect for the calendar year under section 6041(a) is $2,000 plus the inflation adjustment provided in section 6041(h).
Consider watching for the inflation-adjusted threshold for payments made after 2026, since the proposal does not state the amount.
Open questions
The source leaves these open. We'll update this record if a later document answers them.
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What will the reporting threshold be for payments made in 2027 and later years?
History
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Increase in Threshold for Requiring Information Reporting With Respect to Certain Payees; Extension and Modification of Limitation on Wagering Losses Source (opens in a new tab)