For more than 70 years, the threshold that triggered an obligation for businesses to file information returns with the IRS sat unchanged at $600. First established in 1954, that figure was never adjusted for inflation, meaning a reporting requirement originally designed to capture meaningful payments gradually came to apply to an ever-broader range of routine transactions. That changed on July 4, 2025, when the One Big Beautiful Bill Act (OBBBA) was signed into law, bringing with it the most significant update to information reporting thresholds in decades. 

On April 16, 2026, the IRS issued proposed regulations under REG-113229-25 to conform existing rules to the changes made by the OBBBA. The proposed rule addresses two primary areas: the dollar thresholds that trigger information reporting obligations for payments made in the course of a trade or business, and the rules governing the deductibility of wagering losses. 

A Long-Overdue Increase to Reporting Thresholds 

Prior to the OBBBA, businesses and other persons engaged in a trade or business were required to file information returns (Forms 1099-MISC, 1099-NEC, W-2 and W-2G) whenever payments to a recipient equaled or exceeded $600 in the aggregate during the calendar year. The OBBBA raised that base threshold to $2,000 for payments made after Dec. 31, 2025, and beginning in calendar year 2027, the threshold will be adjusted annually for inflation. 

The proposed regulations update the language across multiple code sections to reflect the new threshold. This includes the specific thresholds for reporting gambling winnings from bingo (previously $1,200) and keno (previously $1,500), both of which are now aligned with the new $2,000 statutory level. The threshold for slot machine winnings is similarly updated. 

The higher threshold applies to payments reported on the following forms: 

• Form 1099-MISC (Miscellaneous Information) 
• Form 1099-NEC (Nonemployee Compensation) 
• Form W-2 (Wage and Tax Statement) 
• Form W-2G (Certain Gambling Winnings) 

The practical impact is significant. The IRS estimates approximately 3.5 million payors filed information returns in 2024 for payments falling between the old $600 threshold and the new $2,000 level — approximately 98% of which are small entities with gross receipts under $40 million. With the higher threshold now in effect, the IRS projects that nearly 50 million fewer information returns will be filed in 2027, resulting in an estimated $982 million reduction in compliance burden. 

New Limits on Wagering Loss Deductions 

The proposed regulations also implement a change to how wagering losses may be deducted under Section 165(d) of the Internal Revenue Code. Historically, taxpayers who itemized deductions could deduct wagering losses in full, dollar for dollar, up to the amount of their wagering gains for the year. The OBBBA narrows that benefit. 

Under the new rules, the deduction is limited to 90% of wagering losses, and only to the extent of wagering gains during the taxable year. The change applies to both individual and joint filers, with combined spousal losses subject to the same 90% cap on a joint return. Taxpayers who do not itemize deductions remain ineligible to deduct any wagering losses. The IRS projects that approximately 673,000 taxpayers will claim an itemized deduction for wagering losses for tax year 2026. 

Effective Dates 

• Reporting threshold changes apply to payments made after Dec. 31, 2025. 
• The wagering loss limitation applies to taxable years beginning after Dec. 31, 2025. 

Here to Help  

Our tax pros will continue to monitor this proposed rule and any further guidance as it develops. Contact us if you have questions about how these changes may affect your information reporting obligations or tax planning strategy.