If preparing 1099s each January feels like one of your least favorite administrative tasks, there’s some good news.
Beginning with payments made in 2026, many churches will be required to issue fewer 1099 forms thanks to a significant increase in the federal reporting threshold. While this won’t eliminate the need to track contractor payments, it should reduce paperwork for many churches.
Here’s what you need to know.
The Biggest Change
For many years, churches were required to issue a Form 1099-NEC to most independent contractors who were paid $600 or more during the calendar year.
Beginning with payments made in 2026, that threshold increases to $2,000.
That means many small payments to contractors will no longer require a federal 1099.
For example:
- A guest speaker receives an $800 honorarium.
- A lawn care company is paid $1,500 during the year.
- An IT consultant helps solve a computer problem for $900.
Under the previous rules, these payments generally required a 1099 (assuming all other reporting requirements applied). Under the new rules, they generally will not.
For churches that work with many occasional contractors throughout the year, this change could save several hours of administrative work each January.
Don’t Throw Away Your W-9 Forms
Although fewer 1099s may need to be issued, nothing has changed about collecting Form W-9s.
This is one of the best habits a church can develop.
Always request a completed W-9 before issuing the first payment to a contractor.
Why?
Because you don’t always know how much you’ll end up paying someone during the year.
That guest speaker who visits once in February may return for a conference in the fall. The contractor who fixes one plumbing issue today may become your regular maintenance provider next month.
Having a W-9 already on file prevents a lot of frustration when January arrives.
Remember: Pastors Are Different
One area that sometimes causes confusion is minister compensation.
These new 1099 rules do not change how churches report compensation for pastors who are employees.
Most pastors should continue receiving a Form W-2, not a 1099.
Housing allowance rules, payroll tax reporting, and other minister-specific tax requirements remain the same.
Don’t Forget About State Requirements
While the federal government has increased the reporting threshold, some states may continue using different reporting rules.
Before deciding not to issue a 1099, make sure you’re familiar with your state’s requirements or consult your tax professional.
This Is a Great Time to Review Your Procedures
Whenever tax laws change, it’s a good opportunity to review your church’s financial processes.
Ask yourself:
- Are we collecting W-9s before paying contractors?
- Are contractor payments being tracked correctly?
- Does our accounting software reflect the new reporting threshold?
- Does more than one person review vendor payments?
- Are we maintaining complete vendor records?
Strong financial procedures protect both the church and the people serving it.
Final Thoughts
The increase from $600 to $2,000 is a welcome change that should reduce paperwork for many churches. However, it doesn’t eliminate the need for good recordkeeping.
Think of this change as an opportunity to simplify your reporting—not your financial controls.
Continue collecting W-9 forms, maintain accurate payment records, and review your contractor list throughout the year. When January arrives, you’ll know exactly which vendors require reporting and which do not.
At Your Church Admin, we help churches navigate changes like these every day. Our team manages bookkeeping, payroll, and year-end reporting for churches across the country so pastors and church leaders can spend less time worrying about paperwork and more time focusing on ministry.
If you have questions about the new 2026 1099 requirements or would like help managing your church’s finances, we’d love to talk with you.