1099-NEC in 2026

There are numerous types of IRS Form 1099. This article will focus on the 1099-NEC because it is the most commonly used form in the construction industry.

While many aspects remain the same when using the IRS Form 1099-NEC, a change will affect reporting for the 2026 tax year.

It is essential to note that for the 2025 tax year, construction businesses must still issue Form 1099-NEC under the old reporting standards, which is due by February 2, 2026.  

Here are a few things that remain the same:

Classification of Workers

Know when to use IRS Form 1099-NEC. There is no such thing as a 1099 employee. People who work for your construction business are either employees or independent contractors. In our article, 1099-NEC What it Is and What it Ain’t, we compared dogs to cats and employees to independent contractors.

The takeaway from that article: The “NEC” in 1099-NEC stands for “non-employee compensation.” That helps clarify how the form is to be used.  

1099-NEC Misclassification Ramifications

In another article, Getting Down and Dirty with Form 1099-NEC, the emphasis was on the problems that can and do arise when workers are misclassified. From a list of what bad things have happened to others who have tried to skirt the law with misclassification to Three 1099-NEC Tips, there is food for thought if ever you’re tempted to file incorrectly. 

The takeaway from that article: The bottom line: You can’t afford to misclassify.

A How-To for Filing 1099-NEC

One last thing to mention regarding what remains the same for filing 1099-NEC is found in our article titled, 1099-NEC a Step-by-Step Guide, in which a detailed list (starting with the collection of W-9 forms) is laid out. 

The takeaway from that article: The team at The Profit Constructors is well-versed in dealing with all the nuances, weird circumstances, and slight differences within the construction industry concerning 1099-NEC filing. 

What’s New in 2026 for Form 1099-NEC? 

There will be an increased threshold concerning nonemployee compensation. This means that construction businesses will only be required to file a Form 1099-NEC for nonemployee compensation if the total amount paid to a contractor or nonemployee equals or exceeds $2,000 during the calendar year of 2026. 

Note 1: For the 2025 tax year, the $600 threshold remains in effect, and businesses must still issue 1099-NEC forms for payments of $600 or more. The new $2,000 threshold applies to payments made after December 31, 2025 – in other words, beginning January 1, 2026. 

Note 2: The federal threshold change does not necessarily change state reporting requirements. Construction businesses should familiarize themselves with state-level requirements, which may have lower thresholds.

What Construction Businesses Should Do Now

• Understand which workers qualify for 1099-NEC.

• Prepare for new 1099-NEC reporting standards.

• Adjust processes for the higher 1099-NEC threshold.

Remember, way back there at the top of this page, I said, “There are numerous types of IRS Form 1099.” 

For example, Form 1099-NEC is used to report nonemployee compensation paid to independent contractors, subcontractors, consultants, and attorneys. 

Yet, Form 1099-MISC is used to report payments for rent (including land rent, office space rent, and equipment rentals), prizes or awards, medical and healthcare payments (excluding health insurance premiums), and gross proceeds paid to an attorney in a settlement.

Construction contractors may need to use various 1099 forms and other supporting documents, depending on the specific application. And we know, it can get messy. If you have any questions or require clarification, please don't hesitate to contact us. 866-629-7735   

Ambitious Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:

• Clients and customers

• Employees and subcontractors

• Vendors and service providers

• Governmental entities 

Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:

• Remain informed

• Avoid hassles

• Reduce risks

• Be future-ready

Ready for action? Or want to know more? Contact us today to schedule a complimentary discovery call. 866-629-7735