How Does the New Federal Tax Bill Affect Freelancers and Gig Workers?

If you freelance or work gig jobs, you're probably used to gathering a handful of 1099 forms each spring. That part of tax season isn't going away, but starting in 2026, how those forms get issued will change. The new Federal Tax Bill (OBBBA) updates the reporting rules for businesses that pay freelancers and independent contractors, raising the threshold for when they must issue a Form 1099-NEC or 1099-MISC. Here's what those changes mean, as well as what hasn't changed at all when it comes to reporting your income.

What Changes and When

For the 2025 tax year, nothing changes. Businesses will still need to issue a 1099-NEC or 1099-MISC if they pay an independent contractor $600 or more during the year.

Starting January 1, 2026, the reporting threshold rises to $2,000. That means if a client pays you less than $2,000 during the calendar year, they are no longer required to issue you a 1099 form.

The change was introduced under Section 70501 of the OBBBA and applies to payments made after December 31, 2025. The new $2,000 threshold will be indexed for inflation in future years.

What Did Not Change

While this adjustment may mean fewer 1099 forms in your mailbox, your reporting responsibilities haven't changed. All income you earn is taxable, regardless of whether you receive a form.

That includes payments from clients, tips, side jobs, and other freelance work. Even if you're paid through a platform or directly through a bank transfer, you're still required to keep records and report the total amount when you file your taxes.

Clarifying the 1099-K Confusion

Some of the confusion about this rule comes from a separate reporting requirement: Form 1099-K, used by third-party payment platforms like PayPal, Venmo, and Cash App.

The OBBBA reversed an earlier change that would have lowered the 1099-K threshold to $600. Under the current law, these platforms will only issue a 1099-K if your total payments exceed $20,000 and you have more than 200 transactions in a year. In other words, if you receive payments through an app and they total less than that, you probably won't get a 1099-K, but that money still counts as income and must be reported.

Practical Tips for Freelancers

The new rules may simplify paperwork for clients, but freelancers still need to stay organized. Here are a few steps to help you stay on track:

• Track your income by client, platform, and payment method throughout the year.
• Expect fewer 1099s starting in 2026 if your clients pay you less than $2,000 each.
• Set aside money for taxes from every payment, even if you don't receive a form.
• Make quarterly estimated payments to avoid surprises at tax time.
• Keep digital copies of invoices, deposits, and payment confirmations. These all serve as your documentation.

FAQs

Do I still report income if I don't get a 1099?

Yes. Every dollar earned must be reported, even if no form is issued.

When does the new $2,000 rule start?

It applies to payments made after December 31, 2025, meaning it will affect tax filings for 2026.

Does this affect 1099-K from apps like Venmo or PayPal?

No. The 1099-K rule is separate and currently applies only to users who receive more than $20,000 and complete over 200 transactions in a year.

Will the $2,000 threshold change over time?

Yes, it will be indexed for inflation starting in 2027.

How a CPA Can Help Freelancers Decode The OBBBA

Keeping up with tax law changes is a full-time job in itself, and that's where a CPA can make a difference. At Myrick CPA, we help freelancers and independent workers across the country understand how these new rules affect their reporting and estimated taxes. Our team works electronically through secure client portals and virtual meetings, so you can share your records safely and get clear, practical advice wherever you are.

If you're not sure how the OBBBA affects your freelance taxes, schedule a consultation with us. A little tax planning now can help you avoid big headaches when tax season rolls around this spring.