Freelancers and 1099s: Important Tax Reporting Changes Enacted by the One Big Beautiful Bill

The tax rules around how freelance income gets reported are changing again, thanks to the newly passed One Big Beautiful Bill (OBBBA). While the intent is to simplify paperwork and modernize outdated thresholds, the rollout has created plenty of confusion—especially around Form 1099-K and its shifting requirements. 

For many freelancers, 1099s come in fast and furious during tax season. Understanding these new changes is important so that your records are up to date and you are aware of the tax implications on your freelance income. 

Key 1099 Updates Under OBBBA

The following is a breakdown of the key updates and how to stay compliant under the OBBB. 

• Form 1099-MISC and 1099-NEC thresholds are increasing. Starting with payments made in 2026, businesses will only need to issue these forms if they pay a freelancer or contractor $2,000 or more in a calendar year. This is a significant jump from the previous $600 threshold.
• Form 1099-K thresholds are reverting to the original standard: $20,000 in payments and more than 200 transactions. This change overrides the previously planned lower thresholds of $2,500 in 2025 and $600 in 2026.
• Beginning in 2027, the $2,000 threshold for 1099-MISC and 1099-NEC will be adjusted annually for inflation.

Reporting Freelance Income: What You Still Need to Do

Even with higher income reporting thresholds, your responsibility to report income has not changed.

All of your freelance income is taxable, whether or not you receive a 1099. For example, if you earn $1,500 from a client in any tax year and do not receive a 1099-NEC, you are still required to report that income on your tax return.

Third-party platforms like PayPal, Venmo, Stripe, and Square are considered third-party settlement organizations (TPSOs). They issue 1099-Ks when the $20,000 and 200 transaction threshold is met. Personal transfers, like splitting a dinner bill, are not reportable—but business transactions are.

Good recordkeeping is essential. Reconciling your actual income with what is reported on 1099-Ks helps prevent double-reporting and ensures accurate tax filings. Without clean records, you risk errors that could trigger audits or penalties.

Quick Guide to 1099 Forms

There are multiple versions of 1099s that you must file, depending on where your income is derived from:

• Form 1099-MISC reports miscellaneous income such as rent, prizes, awards, and legal settlements.
• Form 1099-NEC reports non-employee compensation for contractors and freelancers.
• Form 1099-K reports payments processed through third-party networks and credit card processors.

Fortunately, as long as your client or third-party payment platform uses the correct form, you should not need to determine the form to be used. Just be sure to check the forms you do receive and any that you issue to contractors yourself to make sure they are correct.

The Bottom Line on 1099s Reporting Changes for Freelancers

OBBBA may aim to simplify tax reporting, but freelancers still need to stay vigilant. Keep detailed records, understand which forms apply to your income, and consult a tax professional if you are unsure how these changes affect your business. Staying ahead of these changes will make your income tax reporting much easier come tax time