One Big Beautiful Bill (OB3) One Tax Law Change

Are you a business that uses contract labor? Has your business had to file Form 1099-NEC’s or Form 1099-MISC? 

Well the new tax legislation, OB3, has finally changed the reporting requirements for these two forms. 

There are a few tax laws that haven’t changed since I interned in College (about 100 years ago). Seriously, it has been over 30 years, which is a very long time to not make any inflation adjustments to some thresholds.

The deductible amount of a gift a business can write off is $25 per person per year.  Unfortunately, this hasn’t changed. It is crazy to me in 30+ years, this amount hasn’t increased. $25 back in the 1990s could have bought you dinner. Now in 2025, it barely can purchase lunch. Where is our inflation adjustment?

The other tax law that had never changed, the requirement threshold for preparing a Form 1099-NEC and Form 1099-MISC.  For at least the past 30 years a business had to prepare these forms if any service provider or contractor was paid $600 or more.

With OB3, the filing requirement increased from $600 to $2,000. But don’t get too excited yet, the change is effective for tax year beginning after December 31, 2025. Businesses will have to prepare the 1099s for 2025 with the $600 requirement. Going forward in 2027, this amount will be indexed for inflation.

Now if they would change the gift amount for businesses, we can move into the current decade.

Tax Tip – once the filing requirement is $2,000, you can pay your children to work in the business and pay up to $2,000 and there is not reporting of that income. If you have two children you could pay each $599 and take a $1,198 deduction in the business.

Beginning in 2026, you can pay each $1,999 and take a $3,998 deduction in the business.