IRS reporting thresholds change in 2026 for gambling income

Tax professionals have spent years working with familiar information reporting rules. Starting in 2026, one key reporting amount changes significantly.

For calendar years after 2025, the IRS will adjust the minimum threshold for reporting certain payments and for backup withholding on certain information returns each year to reflect inflation. The minimum threshold amount for payments made in calendar year 2026 is $2,000. This change affects how payers handle reporting obligations, how they evaluate backup withholding and how tax pros should advise clients who issue/receive information returns. The reporting threshold affects Forms 1099-MISC, W-2G and 1099-NEC. This is a big change for Form W-2G, Certain Gambling Winnings.

Additionally, the threshold increases for most types of payments, such as rents, prizes, awards, medical and health care payments and crop insurance proceeds.

What changed for 2026 and why it matters

Beginning with payments made in calendar year 2026, the minimum reporting threshold for certain payments increases to $2,000. In practical terms, this means some payers may issue fewer information returns for small-dollar payees. It also means the threshold will no longer be a fixed dollar amount. After 2026, the minimum threshold will be adjusted annually for inflation for Forms 1099.

This shift matters for several reasons.

• It impacts which payments require reporting on certain information returns.
• It affects how payers apply backup withholding in situations tied to reporting thresholds.
• It changes year-end processes for businesses that currently issue large volumes of information returns.
• It introduces an annual inflation adjustment that tax pros must track each year.

Less reporting can reduce administrative time and filing costs. But it does not eliminate the need for strong bookkeeping.

How OBBBA fits into 2026 compliance conversations

Many tax pros are already preparing clients for 2026 changes because the One Big Beautiful Bill Act (OBBBA) affects core individual tax numbers, including the standard deduction and rate bracket thresholds. In its news release announcing 2026 inflation adjustments, the IRS highlights that tax year 2026 includes annual adjustments to more than 60 tax provisions, including those changed by OBBBA.

Which payments and forms are affected

Clients will ask, “Does this apply to my 1099 forms?” The answer will depend on the form type and the specific reporting rules that apply. Review their reporting forms to determine if they include Forms 1099-MISC, 1099-NEC or W-2G. Additionally, certain payments that previously triggered reporting at lower amounts may not require reporting until totals reach $2,000 for the calendar year, depending on the form and reporting category. 

Backup withholding and the new threshold

Backup withholding is often misunderstood by payers and payees. Many clients associate withholding only with payroll, but backup withholding applies to certain reportable payments when required conditions are met, such as missing or incorrect taxpayer identification numbers. Note that international visitors are subject to a 24% withholding of gross winnings, regardless of the threshold amounts.

For 2026, the key point is that the minimum threshold for reporting and backup withholding on certain information returns aligns with the new inflation-adjusted minimum. That does not mean backup withholding disappears. It means the threshold that triggers certain reporting and withholding rules is higher starting in 2026.

From a practice standpoint, this is where the planning opportunity sits. Clients that issue information returns should still:

• Collect W-9 forms 
• Confirm taxpayer identification numbers where possible
• Track payee totals throughout the year
• Apply backup withholding correctly when required

The new threshold does not replace those steps. It changes when reporting obligations begin and may reduce the number of small-dollar payments that require reporting, but the compliance framework remains.

Sports wagering and gambling reporting

Sports wagering continues to grow, and tax pros are seeing more clients with gambling income that does not look like traditional casino winnings. A new section has been added to IRS guidance with information on reporting gambling winnings earned from wagering on sports, which are reported on Form W-2G, Certain Gambling Winnings.

This matters because clients often assume sportsbook winnings are handled automatically or are not reportable unless they receive a form. Gambling winnings are taxable and sports betting activity can create a mix of reportable winnings, nonreportable winnings and deductible losses that require good records.

If you work with clients who use online sportsbooks, now is the time to reinforce recordkeeping expectations and confirm whether Form W-2G reporting applies based on total winnings and the nature of the wager. This is also a good time to remind clients that accurate reporting starts with documentation, not with whether a form was issued.

Update your year-end checklist

One of the biggest shifts for tax pros is not only the move to $2,000. It is the move to annual inflation adjustments.

For years, many clients treated reporting thresholds as static. Tax pros could build training materials, checklists and client guidance around a familiar number. That should influence how you document procedures and communicate with clients. A strong approach includes:

• Confirming the threshold each year
• Updating client reporting reminders
• Verifying software and vendor systems reflect the correct limits
• Educating clients that reporting rules are no longer anchored to a long-standing number

This is especially important for clients who use accounting software that generates 1099 reports. The underlying threshold setting may need to be updated annually if the program does not automatically apply inflation adjustments.

Reinforce W-9 collection and TIN accuracy. Even if fewer payments require reporting, the risk of backup withholding and incorrect taxpayer identification numbers remains. Strong vendor files still reduce problems.

Starting in 2026, the minimum becomes something you will need to confirm each year, similar to the way you verify standard deduction amounts and retirement plan limits. Help your clients be ready for the change.