I’ve seen reports online that the threshold for issuance of W-2Gs was increased in the One Big Beautiful Bill (OBBB) to $2,000 from $600. Is that true?
First, the threshold for issuance of many 1099s was increased by the OBBB to $2,000 from $600 beginning in 2026. That’s in §70433 of the OBBB (which amends §6041(a) of the Tax Code). Thus, next year (not for 2025) there will be fewer 1099s issued.
What I think some commentators read (and wrongly interpreted) is §70433(d) of the OBBB:
(d) APPLICATION TO BACKUP WITHHOLDING.—Section 3406(b)(6) is amended—
(1) by striking ‘‘$600’’ in subparagraph (A) and inserting ‘‘the dollar amount in effect for such calendar year under section 6041(a)’’, and
(2) by striking ‘‘ONLY WHERE AGGREGATE FOR CALENDAR YEAR IS $600 OR MORE’’ in the heading and inserting “ONLY WHERE IN EXCESS OF THRESHOLD.”
The issuance of W-2Gs is governed by §3402(q) of the Tax Code (and related regulations); that was not changed in the OBBB. Thus, beginning in 2026 a W-2G must still be issued at $1,200 for a slot win but backup withholding will not begin until $2,000!
Now, it’s possible Congress meant for both limits to increase. Typically a “technical corrections” bill is proposed. This is usually bipartisan, and fixes “oops” items. However, given how polarized Congress is I have my doubts of such a measure passing this year. And it might be that Congress intended this to be exactly as it is.
Finally, it is possible the IRS will interpret this law change to mean the W-2G threshold is increased to $2,000. That would be welcome by almost everyone but I would not hold my breath waiting for that interpretation.