W-2 box 12, code TT: qualified overtime

Updated November 12, 2026

Code TT in box 12 of Form W-2 is the qualified overtime compensation your employer paid you during the year. It's the part of your overtime pay above your regular rate that the federal Fair Labor Standards Act (FLSA) requires, usually the extra half in time and a half. Code TT is new on 2026 W-2s, which arrive in early 2027, and it's the starting point for the No Tax on Overtime deduction.

What the code TT amount includes

For each hour over 40 in a workweek, half your regular rate of pay. If you earn $20 an hour and work 50 hours in a week, your overtime pay is 10 × $30 = $300. Code TT counts $100 of it: 10 × $10.

• Not your full overtime pay. All your wages, overtime included, are in box 1. Code TT shows only the qualified half.
• Not overtime the FLSA doesn't require. Double time, daily overtime under state law, overtime after 35 or 37.5 hours under a contract, and holiday premiums count only up to the half the FLSA requires for hours over 40. See What counts as qualified overtime.
• Based on your regular rate, not only your base rate. Shift differentials and non-discretionary bonuses raise the FLSA regular rate, so they raise the half too.

Code TT is not your deduction

Your employer reports all your qualified overtime in code TT, even above the deduction limit. If you were paid $30,000 of qualified overtime, your W-2 shows $30,000. Schedule 1-A (Form 1040) starts from the code TT amount, then applies the $12,500 limit ($25,000 on a joint return) and the income phase-out above $150,000 of modified AGI ($300,000 joint). The last line of Part III is your deduction. Try it in the No Tax on Overtime calculator.

With more than one employer, add the code TT amounts from all your W-2s.

Why code TT can differ from your pay stubs

• Pay dates. Overtime counts in the year it's paid, not the year you worked it. Overtime from the last week of December paid in January belongs to the next year.
• Your regular rate. Differentials and bonuses raise the regular rate, so the half can be more than half your base rate.
• Pay above time and a half. If your employer pays double time or daily overtime, only part of that pay is qualified. Dividing all your overtime pay by three gives too much.
• A missing or doubled pay stub in your own records.
• An error by your employer. Code TT is new, and payroll mistakes happen.

If code TT is too low

From 2026 you can deduct only qualified overtime that your employer reported in box 12, code TT. If you believe the amount is too low, ask your employer for a corrected W-2, Form W-2c. Employers have to file a W-2c with the Social Security Administration and give you a copy when they find an error in code TT.

Without a W-2c, you can use only the amount on your W-2, even if you were paid more. A substitute W-2 (Form 4852) doesn't count for this deduction. Bring your pay stubs to the conversation: hours over 40 each week, your rate and the overtime pay.

If code TT is too high

You can deduct only qualified overtime you were actually paid. If your W-2 shows $10,000 but you were paid $5,000 of qualified overtime, you can include no more than $5,000 on Schedule 1-A. Ask your employer to correct it.

No code TT on a 2025 W-2

For 2025 the IRS didn't require employers to report qualified overtime separately, so most 2025 W-2s don't show it. For 2025, people work out the amount from their pay stubs and other records. From tax year 2026 there's no such relief: no code TT, no deduction.

Questions

Is the code TT amount taxable?

It's already part of your taxable wages in box 1. Code TT shows how much of those wages you may be able to deduct on Schedule 1-A.

Where do I enter code TT on my return?

In Part III of Schedule 1-A (Form 1040), "No Tax on Overtime". Tax software asks for box 12 codes when you enter your W-2.

My overtime is on a 1099. Is there a code TT?

Rarely, a worker who is an employee under the FLSA is treated as an independent contractor for tax purposes. Then qualified overtime is reported on Form 1099-NEC (box 1d) or 1099-MISC (box 14) instead.

I'm salaried and code TT is blank. Why?

Employees who are exempt from FLSA overtime don't receive qualified overtime compensation, even if they get overtime pay under a contract or company policy.

Sources

• IRS FS-2026-13, questions and answers about the deduction (August 2026), Q6, Q10, Q11 and Q19–Q23
• Schedule 1-A (Form 1040) (IRS)
• 26 U.S.C. § 225 (Cornell LII)

General information, not tax advice. Halfback is not affiliated with the IRS or any government agency.