1099 State Reporting Requirements: Thresholds, CF/SF, and Deadlines

If you issue Forms 1099, 1099 state reporting requirements are set independently by each state’s revenue department, which means a payment can trigger a state filing even when no federal form is due, and a federal filing does not always satisfy the state. The rules turn on where the recipient lives, where the work was done, whether state tax was withheld, and whether the state participates in the IRS’s forwarding program. For 2026 the gap between federal and state rules is wider than usual, because the federal reporting floor for most 1099 payments rose from $600 to $2,000 while many states kept their lower thresholds in place.

How the 2026 Federal Threshold Change Affects State Filings

For payments made after December 31, 2025, the minimum federal reporting threshold for Form 1099-NEC and several other information returns increased from $600 to $2,000.¹ Starting in 2027, that $2,000 figure is adjusted annually for inflation.²

That change applies only at the federal level. States set their own thresholds, and many have not matched the new $2,000 floor. A state can still require a 1099 for a $1,000 payment even though you no longer owe a federal form for the same payment. The old shortcut — if I don’t file federally, I don’t file with the state — no longer works. Each state’s threshold needs a separate look.

What Triggers a State Filing Obligation

A state can require reporting when it has a connection to the payment strong enough to demand one. That connection usually exists when the recipient lives in the state or the work was performed there. The address and taxpayer identification number on the recipient’s Form W-9 are your main tools for identifying which states are in play.³

Form 1099-NEC, for nonemployee compensation, is the form most commonly required at the state level. Forms 1099-MISC (rents, royalties, and other payments) and 1099-K (payment network transactions) also trigger state requirements in many jurisdictions. Each state decides which form types it wants, and some only require filings when state income tax has been withheld.

State Thresholds Vary

Even before the federal jump to $2,000, state dollar amounts already diverged from the old $600 floor. Alabama, for instance, requires 1099-NEC filing when payments reach $1,500 or more of state taxable income and no state tax has been withheld. Some states track the prior $600 threshold. Others set the trigger at any amount when state withholding is involved. Because each state’s revenue department controls its own rules, a single national chart tends to go stale quickly.

Form 1099-K thresholds vary even more. The federal standard for third-party payment network reporting remains significantly higher than many state thresholds.⁴ Several states use thresholds as low as $600 for 1099-K; others use $1,000 or $1,200. If you process payments through a platform and have recipients in multiple states, each state’s 1099-K threshold has to be checked on its own.

States With No 1099 Requirement

Not every state demands information returns. States with no income tax generally have no 1099 filing requirement at all: Alaska, Nevada, New Hampshire, South Dakota, Texas, Washington, and Wyoming. If a contractor lives in one of those states and performed no work in a state that does require reporting, there is no state 1099 obligation for that payment.

Two of the no-income-tax states are partial exceptions. Florida and Tennessee do not require most 1099 forms but maintain some reporting requirements around Form 1099-K. If you have payment network transactions flowing to recipients there, check the current rules before assuming you owe nothing.

Using the Combined Federal/State Filing Program

The Combined Federal/State Filing (CF/SF) Program lets you send 1099 data to the IRS and have the IRS forward it to participating state tax agencies. The IRS extracts the state-coded records from your federal submission and transmits them to the relevant states.⁵ For a business filing across many states at once, this can eliminate dozens of separate state submissions.

To use the program, you submit an electronic test file coded for CF/SF during your first year of participation. If the test is accepted, the IRS sends an approval letter. Each record in your file must include the correct two-digit state code and the state-taxable income amount.⁵ Wrong codes mean the data never reaches the intended state, even if the federal filing is fine.

A majority of states participate in CF/SF, though the roster shifts occasionally. Participation means a single electronic submission to the IRS can satisfy the state filing requirement for those jurisdictions.

What CF/SF Does Not Handle

The program only forwards the raw 1099 data. It does not file the state-specific reconciliation or transmittal forms that some participating states still require. Several CF/SF states expect you to separately submit a summary form, file a notification that you’re using the program, or both.⁵ The IRS is explicit that it acts as a forwarding agent only. Confirming that a state actually received and accepted your data is your job, not the IRS’s.

The program also does not cover every form type for every state. A state might accept 1099-NEC through CF/SF but require direct filing for 1099-MISC or 1099-K. And if you’ve withheld state income tax from a payment to a nonresident contractor, most states require you to file directly regardless of CF/SF.

When You Must File Directly With a State

Some states do not participate in CF/SF at all. Others participate but still expect direct filing for certain form types or when state withholding is involved. In either case, you use each state’s own portal, file format, and submission procedure. State systems usually require an upload through a proprietary online interface with specifications that differ from the federal format, plus a state-specific transmittal form. Paper filing is rarely an option and is usually limited to very small volumes.

Nonresident Withholding Almost Always Requires Direct Filing

This is where state reporting most often trips businesses up. A number of states require payers to withhold state income tax from payments to contractors who don’t live in the state but performed work there. You calculate the withholding at the state’s rate, deduct it from the payment, remit it to the state revenue department, and report it on the 1099.

The act of withholding almost always triggers a mandatory direct filing. Even if the state participates in CF/SF, you typically cannot rely on the IRS to forward 1099 data that includes state withholding amounts. You file directly, using whatever portal or format the state requires.

Missing a nonresident withholding obligation is expensive. When a state finds that withholding should have occurred but didn’t, the payer is usually held liable for the tax that should have been withheld, plus penalties and interest. Determining resident-versus-nonresident status for every contractor and every state where work was performed is tedious, and skipping it is the most common source of state-level 1099 problems.

Federal Electronic Filing Threshold

Federal law requires electronic filing if you issue 10 or more information returns of any type in a calendar year. That’s an aggregate count across all form types, not 10 of each.⁶ Five Forms 1099-NEC and five Forms 1099-MISC together hit the threshold and require e-filing of everything.

Many states impose their own e-filing mandates, often triggered by an even lower volume of returns. Submitting paper forms to a state that requires electronic filing can bring a separate penalty for the wrong format, independent of whether the data itself is correct and timely.

A related mechanics change is coming. The IRS’s Filing Information Returns Electronically (FIRE) system is being retired. Tax year 2026 (filing season 2027) is the targeted date for FIRE’s shutdown, after which the Information Returns Intake System (IRIS) will be the only federal intake system for information returns.⁷ CF/SF continues, with data flowing through IRIS instead. If you use payroll software or a filing service, confirm with your vendor that the switch is handled.

Deadlines

The federal deadline for filing Form 1099-NEC with the IRS is January 31. Form 1099-MISC is due February 28 on paper or March 31 electronically.⁸ If any deadline falls on a weekend or legal holiday, the due date shifts to the next business day.

States relying on CF/SF generally treat the federal filing date as the state deadline too. A late federal filing automatically means a late state filing in those jurisdictions. States that require direct filing set their own dates. Some align with January 31, others align with W-2 deadlines, and a few set entirely independent dates. When state withholding is involved, the state deadline for remitting the withheld tax may be earlier than the information return deadline.

Extensions are available in many states, but the process varies. Some states automatically grant an extension when the IRS has approved a federal extension. Others require a separate state-specific request.

Penalties

Federal and state penalties apply independently. Both the IRS and one or more states can penalize you for the same filing failure.

Federal penalties scale with how late the correction happens, starting at $60 per return if corrected within 30 days of the due date and rising to $340 per return if filed after August 1 or not filed at all. Intentional disregard costs $680 per return with no annual cap.⁹

State penalties stack on top. Per-return fines at the state level typically range from $5 to $200 depending on the state, and they multiply across every erroneous or late form. States that mandate electronic filing often add a separate penalty for submitting in the wrong format. Failing to withhold from nonresident contractors when required usually carries the steepest state-level consequence: liability for the full amount that should have been withheld, plus interest and additional penalties.

Correcting State Returns

If you find an error after filing, the correction path depends on how you originally submitted. For forms filed through CF/SF, corrected returns filed electronically with the IRS are forwarded to participating states the same way originals are.⁵ If only the state-level information needs correcting and the federal return is fine, the IRS instructions are clear: do not send the correction to the IRS. Contact the state tax department directly.¹⁰

For states where you filed directly, corrected forms go through whatever portal or system the state uses, usually with a corrected transmittal form alongside the corrected 1099. If you were required to e-file the originals, the corrections must also be e-filed.¹⁰ Fixing errors quickly matters, because both federal and state penalties are lower when the correction happens within 30 days of the original due date.

1
Internal Revenue Service. Form 1099 NEC and Independent Contractors
2
Internal Revenue Service. 2026 Publication 1099 (Draft)
3
Internal Revenue Service. Instructions for the Requester of Form W-9
4
Internal Revenue Service. Understanding Your Form 1099-K
5
Internal Revenue Service. Topic No. 804, FIRE System Test Files and Combined Federal/State Filing (CF/SF) Program
6
Internal Revenue Service. Topic No. 801, Who Must File Information Returns Electronically
7
Internal Revenue Service. Filing Information Returns Electronically (FIRE)
8
Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
9
Internal Revenue Service. Information Return Penalties
10
Internal Revenue Service. General Instructions for Certain Information Returns