The 2026 W-2 will look different from anything your payroll team has processed before. The One Big Beautiful Bill Act introduced three new Box 12 reporting codes effective for tax year 2026, and if your payroll system hasn't been updated, the W-2s you file in January 2027 will be wrong.

The Three New Box 12 Codes

The IRS has assigned new codes for amounts that must now be separately reported on the W-2:

  • Code TT: Qualified overtime compensation: The amount of overtime pay that qualifies for the new overtime exclusion under the OBBBA.
  • Code TP: Cash tips: Required for employees in tipped occupations, reported separately for FICA and income tax reconciliation purposes.
  • Employer contributions to Trump accounts (formerly known as MAGA accounts): Employer contributions to the newly created savings account vehicle must be reported in Box 12 using the designated code.

What "Qualified Overtime" Actually Means

Code TT does not apply to the entire overtime wage. Qualified overtime compensation, for purposes of the W-2 reporting requirement, means specifically the overtime premium, the additional 0.5x under the FLSA. It does not include the base 1x of overtime pay that would have been paid at straight time.

Example: an employee earning $20/hour works 50 hours in a week. The first 40 hours are straight time. The additional 10 hours are paid at $30/hour. $20 (straight time) plus $10 (premium). The qualified overtime compensation for Code TT purposes is the $10 premium, not the $30 hourly rate.

Payroll systems that track only total OT hours at the blended rate will need configuration changes to capture the premium separately.

Box 14 and Tipped Occupations

For employers in the food service, hospitality, and other tipped industries, Box 14 now requires a split to separately identify the Treasury-designated tipped occupation code. This is in addition to the Code TP reporting in Box 12.

The IRS has published guidance on which occupation codes fall within the designated tipped occupation categories. Employers should confirm their payroll system maps job codes to the correct Treasury occupation category.

What to Do Before Year-End 2026

  • Confirm your payroll software vendor has released a 2026 W-2 update that includes Code TT and Code TP functionality, and apply it before your next payroll run.
  • Review your overtime pay calculation logic. Ensure your system can isolate the 0.5x FLSA premium from total overtime pay for Code TT reporting.
  • Identify tipped employees and confirm their occupation codes map to the correct Treasury tipped occupation categories for Box 14 purposes.
  • If your business made employer contributions to Trump accounts, confirm the payroll system has the correct Box 12 code assigned and the YTD contributions are accumulating correctly.

Filing Deadline

W-2s for tax year 2026 are due to employees and the SSA by January 31, 2027. For a payroll change of this scope, testing your year-end W-2 output in Q4 2026 (rather than discovering errors after the deadline) is the only reliable approach.

General information only. W-2 reporting requirements are subject to IRS guidance. Consult your payroll provider and tax adviser for guidance specific to your situation.