W-2 Box 12 Codes TT and TP Explained (No Tax on Overtime and Tips)

Short answer: on Form W-2 for tax year 2026 onward, box 12 code TT is your qualified overtime compensation — only the FLSA overtime premium, not your whole overtime pay. Box 12 code TP is the total cash tips you reported to your employer, and box 14b shows the Treasury tipped-occupation code (up to two). These feed the two new deductions on Schedule 1-A. Estimate yours with the No Tax on Overtime Calculator and the No Tax on Tips Calculator.

Code TT — qualified overtime compensation

• What it is: the premium portion of overtime the Fair Labor Standards Act requires — the extra half of the regular rate for hours over 40 in a workweek (26 U.S.C. §225).
• What it is not: your total overtime pay. If you earned $9,000 of overtime at time and a half, code TT should show about $3,000.
• Double time: only the FLSA half-time premium qualifies, so $20,000 of double-time overtime yields about $5,000 (IRS example).
• Reported in full: the employer reports all qualified overtime even if it is above the $12,500 deduction limit ($25,000 joint); the limit is applied on your return (IRS Fact Sheet 2026-13).
• Errors: a wrong code TT amount is fixed with Form W-2c filed with the Social Security Administration and a corrected copy to you (IRS Fact Sheet 2026-13).

Pay stubs often show the same split as "OT premium 0.5" — see what the 1.5 / 1.0 premium rate factor means.

Code TP — cash tips reported to the employer

• What it is: total cash tips (cash, card, check, app payments denominated in cash) you reported to your employer, including tips received through a tip pool (Treas. Reg. §1.224-1).
• Box 14b — occupation code: a three-digit Treasury Tipped Occupation Code (TTOC). Employers can enter up to two codes. Code 000 means at least some tips came from an occupation that is not on the list (draft 2026 Form W-2 instructions).
• Not included: mandatory or automatic service charges, such as an 18% large-party charge, even if paid out to staff — they are not tips (26 U.S.C. §224(d)(2)).

How the codes map to Schedule 1-A

Both deductions are available whether or not you itemize. Neither reduces Social Security or Medicare tax, and married couples must file jointly to claim either one. Qualified overtime does not include any amount that is a qualified tip, so the same dollars cannot be counted twice.

Tax year 2025 was different

Employers were not required to report either amount separately for 2025. Employees could use pay stubs, an optional employer statement, Form W-2 box 7 (social security tips) or Form 4137 for unreported tips, as described in IRS Notice 2025-69.

Checklist when your 2026 W-2 arrives

• ☐ Code TT is roughly one-third of your time-and-a-half overtime pay (one-quarter if paid at double time).
• ☐ Code TP matches the tips you reported during the year.
• ☐ Box 14b shows your occupation code, not 000, if your job is a tipped occupation.
• ☐ If anything is wrong, ask your employer for a W-2c before you file.

Sources

• 26 U.S.C. §224 — qualified tips
• 26 U.S.C. §225 — qualified overtime compensation
• Treasury/IRS — TD 10044, final regulations on tipped occupations (91 FR 19026, April 13, 2026)
• IRS — Fact Sheet 2026-13 (August 6, 2026)
• IRS — Draft 2026 Instructions for Forms W-2 and W-3
• IRS — Notice 2025-69
• IRS — Schedule 1-A (Form 1040)