What is box 12 code TT on a W-2?

Code TT is where an employer reports qualified overtime compensation on Form W-2, starting with tax year 2026. It holds the FLSA-required overtime premium paid during the year, and it is the ceiling on what the employee can deduct.

How do I report qualified overtime compensation on a W-2 for 2026?

Report the full amount you paid in box 12 using code TT, even when it sits above the deduction limit. A worker who is an employee for FLSA purposes but an independent contractor for Internal Revenue Code purposes is the one rare exception. That worker's amount goes on Form 1099-MISC box 14 or Form 1099-NEC box 1d instead.

Is overtime pay tax free under the new law?

No. "No Tax on Overtime" is the nickname the fact sheet itself notes, not a description of the rule. Overtime stays in gross income and stays subject to income tax withholding, social security, Medicare, and federal unemployment taxes. What the law added is a deduction on the employee's own return, capped at $12,500, or $25,000 on a joint return. It is gone for tax years beginning after December 31, 2028.

What if an employer reports the wrong overtime amount on a W-2?

The employee has to request a Form W-2c. If the employer is unwilling or unable to furnish one, the employee cannot use the omitted or understated amount, even though the employer paid it. Form 4852, the substitute W-2, does not work here.

What are employers required to do for the qualified overtime deduction?

Separately report qualified overtime in box 12 using code TT, starting with tax year 2026. Withholding changes only when the employee furnishes an updated and valid Form W-4. Correct any error with Form W-2c, filed with SSA and furnished to the employee as soon as possible.

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HR & PAYROLL

Box 12 Code TT: How to Report Qualified Overtime on Your 2026 W-2s

The number you enter in W-2 box 12 code TT is the ceiling on your employee's overtime deduction under the 2026 IRS rules, so get it right before you file.

SMAART Company

August 31, 2026

11 min read

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Box 12 Code TT: How to Report Qualified Overtime on Your 2026 W-2s

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Box 12 Code TT: How to Report Qualified Overtime on Your 2026 W-2s

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