The W-2 arriving in January 2027 will have codes on it that have never appeared on a W-2 before. Three of them, in Box 12, plus a Box 14 that has been split in two.
This is the tidying-up of something that was genuinely messy last year. Workers claiming the tips and overtime deductions for 2025 had to reconstruct the figures themselves, because the form had nowhere to report them. For 2026 wages the numbers arrive printed on the form.
What the boxes do not do is tell you what you can deduct. That distinction is the whole point of this article, and getting it wrong in either direction costs money.
Quick answer
| Code | What it reports |
|---|---|
| TA | Employer contributions to a Trump Account under a Section 128 program |
| TP | Total cash tips reported to the employer |
| TT | Total qualified overtime compensation |
Box 14 has also been split. Box 14a is the old “Other” box. Box 14b is new and carries the Treasury Tipped Occupation Code.
These are informational. None of them changes what was withheld from your paycheck. They exist to feed Schedule 1-A, the new form where the tips and overtime deductions are claimed.
Code TP is not your deduction
Read the official description carefully: TP is the total amount of cash tips reported to the employer. It is not “qualified tips,” and it is not the amount you can deduct.
The two can differ. A qualified tip has to be voluntary, and it has to be earned in an occupation that customarily and regularly received tips on or before December 31, 2024. A mandatory service charge automatically added to a large table is not voluntary, so it is not a qualified tip, even though it may well have been reported and taxed as income.
That is why Box 14b exists. The Treasury Tipped Occupation Code identifies which listed occupation your job falls into, and it is the second half of the eligibility question. Box 12 tells you the amount, Box 14b tells you the occupation, and you combine them on Schedule 1-A.
The practical consequence is that the TP figure is a starting point rather than an answer. Whether the specifics of your job qualify is covered in No Tax on Tips.
Code TT is the half, not the whole
This is the single most misunderstood number in the entire “no tax on overtime” conversation, and the IRS added a worked example to the final instructions precisely because people were getting it wrong.
Qualified overtime is only the amount that exceeds your regular rate, which is the “and-a-half” portion of time and a half. It is not the overtime paycheck.
| Ten overtime hours at $30 an hour regular rate | Amount |
|---|---|
| Total overtime pay received, at $45 an hour | $450 |
| The portion equal to the regular rate | $300 |
| Qualified overtime, reported under code TT | $150 |
Two further constraints. The overtime has to be required under section 7 of the Fair Labor Standards Act, so overtime paid under a union contract or a state rule that goes beyond federal requirements may not count. And the deduction is capped at $12,500, or $25,000 for joint filers, against a tips deduction capped at $25,000. Both are available for tax years after 2024 and before 2029, so this is temporary.
Income phase-outs apply to both, which means a high enough household income removes the benefit regardless of what the box says. No Tax on Overtime and the fuller complete guide to what qualifies cover the eligibility side.
Code TA, for a benefit that barely exists yet
TA reports employer contributions to a Trump Account for an employee or an employee’s dependent, made under a Section 128 program. Employers could begin contributing on July 4, 2026, up to $2,500 a year, excluded from your gross income.
Most people will see nothing here, because most employers have not set up a program. If yours has, the amount appears under TA and is not part of your taxable wages. The mechanics are in the article on pre-tax payroll contributions to these accounts, and the accounts themselves in Trump Accounts Are Live.
What did not change
The IRS was pointed about this in the final instructions, and it is worth repeating because the marketing language around these deductions suggests otherwise.
Tips and overtime are still subject to federal income tax withholding. They are still subject to Social Security and Medicare tax, both your share and your employer’s. Nothing about these boxes reduces what comes out of a paycheck during the year.
The deduction happens on your return, after the fact. So a tipped worker who expects smaller withholding starting in 2026 will be disappointed, and one who wants the benefit during the year rather than as a refund has to adjust their W-4 to get it. That is the same mechanism described in The W-4 Problem.
What to check when the form arrives
January is the moment to catch an error, because a correction then is a conversation with payroll and a correction in April is a Form W-2c and a delay.
- Does TP roughly match your own tip records? If you kept a log, compare. A large gap means either unreported tips on your side or a payroll error on theirs, and the two have different consequences.
- Is Box 14b populated? If you work in a tipped occupation and it is blank, ask. Without the occupation code the deduction is harder to support.
- Does TT look like roughly a third of your overtime pay? On standard time and a half, the premium portion is one third of the total overtime amount. If TT equals your full overtime pay, that is a red flag worth raising.
- If you worked more than one job, each employer reports separately and the caps apply to you, not to each W-2.
- If a figure is wrong, raise it with payroll before filing rather than adjusting the number yourself.
Point three is the one most likely to save someone. An employer configuring payroll for the first time under these rules can easily map the whole overtime line into TT instead of the premium portion, and the employee is the one who ends up defending the deduction.
Sources and notes
Code definitions, the Box 14 split, deduction caps, and the treatment of tips and overtime for withholding and payroll tax purposes follow the IRS General Instructions for Forms W-2 and W-3 for 2026. The deductions themselves were created by P.L. 119-21 and apply for tax years beginning after 2024 and ending before 2029.
The overtime example uses round numbers to illustrate the premium portion and is not a calculation of anyone’s actual deduction. Eligibility for both deductions depends on occupation, the nature of the payment, and income, none of which a general article can assess for you. This article is for general educational purposes only and should not be treated as personal tax or payroll advice.
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