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New Tax Bill Raises Threshold for 1099-MISC from $600 to $2,000

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Great news for brands operating consumer promotions, sweepstakes, and contests! Effective for the 2026 tax year, the One Big Beautiful Bill Act (P.L. No. 119-21) raises the threshold for issuance of a Form 1099-MISC from $600 to $2,000. For the 2027 tax year and thereafter, the threshold will be adjusted for inflation.

What is Form 1099-MISC? Form 1099-MISC is used to report non-wage income such as prizes and awards. Businesses are required to issue them to individuals who receive non-wage payments above the threshold in a calendar year.

What’s the change? Previously, when the value of a prize equaled or exceeded $600, promotion winners needed to fill out a Form W-9, and sponsors needed to issue a Form 1099-MISC. Now, the actual value for any payments made or prizes awarded after Dec. 31, 2025 can be up to $1,999 before a winner is required to complete a W-9 or a sponsor is required to issue a 1099-MISC.

What hasn’t changed? The actual value awarded in a prize will still be treated as income, and the prize winner will be responsible for the payment of any income taxes imposed thereon.

The Bottom Line. The 2026 threshold increase will significantly reduce friction for the prize winner’s experience, as winners of prizes valued under $2,000 will no longer need to provide a Social Security or Tax Identification Number to receive the prize. This change will also reduce beginning-of-the-year paperwork for the business, as fewer prize winners will need to receive a Form 1099-MISC.

If you have any questions about this change – or about running legally compliant promotions in general – please contact a member of the Advertising Law team.

And, if you are interested in a more in-depth examination of the tax implications created by the new tax bill, read our Tax Practice Group’s analysis here: <a href="https://www.bakerlaw.com/insights/analysis-of-the-2025-federal-tax-changes-under-the-one-big-beautiful-bill-legislation/" target="_blank" rel="noreferrer noopener">https://www.bakerlaw.com/insights/analysis-of-the-2025-federal-tax-changes-under-the-one-big-beautiful-bill-legislation/</a>.

Congratulations, Promotion Sponsors – You’ve Won Less Prize Paperwork!