When your 2026 W-2 arrives in January 2027, it will look slightly different from any W-2 you've received before. Box 12 has two new codes, and there's a new sub-box in Box 14. They exist for one reason: to feed the new tips and overtime deductions created by the 2025 tax law. If you see letters you don't recognize, this guide decodes them.

The two new Box 12 codes

  • Code TP — total qualified tips. The cash and charged tips you reported to your employer during the year, in an occupation on the IRS tipped-occupation list. This is the starting number for your tips deduction (up to $25,000).
  • Code TT — total qualified overtime compensation. The overtime premiumyour employer paid you as required by the Fair Labor Standards Act — the extra "half" in time-and-a-half, not your full overtime pay. This feeds the overtime deduction (up to $12,500, or $25,000 on a joint return).

A common surprise: the TT amount looks "too small." If you earned $9,000 of total overtime pay at time-and-a-half, code TT will show roughly $3,000 — because only the premium third qualifies. The box is right; the slogan was misleading. Our overtime guide walks through the math.

Box 14b — the tipped occupation code

If you reported tips, your employer also enters a Treasury tipped occupation codein the new Box 14b — a short code identifying your job (server, bartender, hairstylist, and so on). The IRS uses it to confirm your occupation is on the qualified list. You'll copy this code onto Schedule 1-A when you claim the tips deduction. If you worked tipped jobs in two occupations, up to two codes can appear.

Why 2025 W-2s didn't have these codes

The deductions technically started with tax year 2025, but the IRS gave employers transition relief: 2025 W-2 forms weren't changed, and employers weren't required to separately report qualified tips or overtime for that first year. Workers claiming the 2025 deduction had to reconstruct the numbers from pay stubs and employer summaries. Tax year 2026 is when reporting becomes standard — the codes above are how it happens.

How to claim the deductions with these numbers

Both deductions are claimed on Schedule 1-A, a form attached to your regular Form 1040. The flow is simple:

From W-2 to refund — the paper trail

  1. Line 1W-2 Box 12, code TP (tips)→ Sch 1-A Part II
  2. Line 2W-2 Box 12, code TT (overtime)→ Sch 1-A Part III
  3. Line 3Box 14b occupation code→ Sch 1-A Part II
  4. Line 4Schedule 1-A total→ Form 1040

Schedule 1-A also applies the income phase-outs: both deductions shrink by $100 for each full $1,000 of modified adjusted gross income above $150,000 (single) or $300,000 (joint). You don't need to itemize — these deductions stack on top of the standard deduction. Remember the two hard requirements: a valid Social Security number, and joint filing if you're married.

What to do if the boxes look wrong

  • Code TP missing but you reported tips? Ask payroll whether your occupation was classified on the Treasury list. If the W-2 is simply wrong, request a corrected W-2 (Form W-2c) before filing.
  • Code TT missing but you worked overtime?Check whether your overtime was FLSA-required. Salaried exempt employees and purely state-law or contract overtime don't generate a TT amount.
  • Self-employed?You won't get a W-2 at all — qualified tips flow from your 1099s and records instead, still onto Schedule 1-A.

If you worked for more than one employer

Tipped and hourly workers often hold two jobs in a year, and each employer issues its own W-2. Read every form: a TP or TT amount can appear on one, both, or neither. When you fill out Schedule 1-A, you add the qualifying amounts together — but the caps apply to your return, not to each job. Two W-2s showing $16,000 of code TP each do not produce a $32,000 deduction; the tips deduction still stops at $25,000.

Two employers, one return

  1. Line 1Restaurant W-2 — Box 12, code TP$16,000
  2. Line 2Catering W-2 — Box 12, code TP$9,000
  3. Line 3Combined qualified tips$25,000
  4. Line 4Deduction after the $25,000 cap$25,000

The same addition applies to code TT across employers, against the overtime cap of $12,500 (or $25,000 on a joint return). Keep both forms with your records — if the IRS questions a figure later, the W-2s are your evidence.

Quick answers

  • When should the form arrive?Employers must furnish W-2s by January 31. If it hasn't reached you by mid-February, contact your employer first — most delays are address errors.
  • Box 12 only has four lines. What if I have more codes? Your employer issues an additional W-2 rather than dropping a code. Every form for the same employer and year belongs on the same return.
  • Do these deductions cut my Social Security and Medicare tax?No. They reduce taxable income for income tax only. Payroll taxes still apply to your full wages, tips and overtime included — which is why your paycheck won't change.
  • Does my state follow the same rules?Not automatically. States decide separately whether to match federal deductions, so a federal deduction may not reduce your state tax. Check your state's guidance before assuming it carries over.

Before filing season, you can estimate both deductions now: the tips calculator and overtime calculator apply the same Schedule 1-A steps to your own numbers, and the Total Savings Estimator combines them with the senior and SALT deductions if you qualify.