The phrase “$600 rule” is shorthand, not a single universal IRS rule. In the business setting, it usually refers to information-return reporting. The IRS says payers use Form 1099-NEC and Form 1099-MISC to report certain business payments, including nonemployee compensation and certain other payments, and that the traditional threshold was $600, with the IRS now stating $2,000 for payments made after December 31, 2025, for many of those reporting requirements.

 

For example, the IRS says a payer must generally report business payments to a nonemployee for services, including payments to an attorney, on Form 1099-NEC once the threshold is met. The IRS also says Form 1099-MISC is used for categories such as rents, prizes, awards, and other reportable payments, historically at the same $600 level and now subject to the updated threshold noted above for post-2025 payments.

 

Just as important, the “$600 rule” does not mean income under that amount is tax-free. The IRS says you must report taxable business income whether or not you receive an information form. And there is a separate rule for Form 1099-K: the IRS announced that under the One, Big, Beautiful Bill, the reporting threshold reverted to more than $20,000 and more than 200 transactions for third-party settlement organizations.