What Is W-2 Box 12 Code TT? Qualified Overtime for 2026
The One Big Beautiful Bill Act lets eligible workers deduct qualified overtime compensation for 2025 through 2028. From tax year 2026, employers report it on Form W-2 in box 12 with code TT (General Instructions for Forms W-2 and W-3). For 2025, employers could report it in box 14 or give a separate statement, under the transition relief in Notice 2025-69.
What counts
Only the premium above the regular rate required by section 7 of the FLSA — for most employees, ½ × regular rate × hours over 40 in a workweek (FS-2026-13). At $20 an hour and 50 hours, that's $100.00.
What doesn't
- The straight-time part of overtime pay.
- Overtime paid only under state law or a contract (such as daily overtime), or above time-and-a-half.
- Pay to FLSA-exempt employees.
Is it capped?
The employee's deduction is limited to $12,500 ($25,000 on a joint return) and phases out above $150,000 of modified AGI ($300,000 joint). The W-2 amount is not capped: report the full qualified overtime.
Last reviewed 2026-10-28. General information, not tax advice. Your tax adviser can tell you what applies to you.