W-2 Box 12 Code TT — Qualified overtime compensation (OBBBA no tax on overtime)
New for tax year 2026 W-2s — the FLSA overtime premium ('and-a-half' portion of time-and-a-half), used to substantiate the OBBBA qualified overtime deduction (up to $12,500 single / $25,000 MFJ, phased out above $150k/$300k MAGI, tax years 2025–2028).
Estimate this deduction: Use the No Tax on Overtime Calculator to see exactly how much Box 12 Code TT is worth on your return.
At a glance — Box 12 Code TT
- Box name
- Qualified overtime compensation (OBBBA no tax on overtime)
- Reports to
- Schedule 1-A (Form 1040), Additional Deductions — flows to the above-the-line deductions total on Form 1040. Not reported directly on Line 1a.
- Check against
- Your FLSA overtime premium pay for the year — the 'and-a-half' portion of time-and-a-half, not your full overtime paycheck. Check your final pay stub's overtime premium YTD total or ask your employer.
What Box 12 Code TT means
Code TT is a new W-2 Box 12 code, first appearing on the tax year 2026 Form W-2 (received January 2027), reporting your total qualified overtime compensation — the premium portion of overtime pay required under section 7 of the Fair Labor Standards Act (FLSA). It substantiates the qualified overtime deduction created by the One Big Beautiful Bill Act (OBBBA) — new IRC §225. For tax year 2025 returns (filed in 2026), the IRS granted transition relief in Notice 2025-62 and Notice 2025-69: employers were not required to separately report qualified overtime on the 2025 W-2 (though some voluntarily did, commonly in Box 14), and employees could rely on pay records or a reasonable estimate.
Only the premium counts, not the full overtime wage. If your regular rate is $20/hour and overtime pays $30/hour, only the $10/hour premium is qualified overtime compensation — the base $20/hour was already taxed as regular wages and isn't part of code TT. The deduction, claimed on new Schedule 1-A (Form 1040), is capped at $12,500 for single filers and $25,000 for married filing jointly, and phases out for MAGI above $150,000 (single) or $300,000 (MFJ), reducing by $100 for every $1,000 over the threshold.
Only FLSA non-exempt employees generate qualified overtime compensation — salaried exempt employees (management, professional, or administrative roles above the FLSA salary threshold) won't have a code TT amount because they aren't legally entitled to FLSA overtime pay in the first place.
Tax return implications
- Feeds new Schedule 1-A (Form 1040), an above-the-line deduction available whether you itemize or take the standard deduction — it does not change Box 1, 3, or 5 wages themselves.
- Does NOT reduce Social Security or Medicare tax — FICA (7.65%) still applies to the full overtime paycheck, including the premium portion, even though the income tax deduction is claimed separately.
- Combined with the qualified tips deduction (Box 12 code TP) and other Schedule 1-A items, but each has its own separate cap — they don't share a combined limit.
Common pitfalls & things to check
- The deduction is temporary — available for tax years 2025 through 2028 only, unless Congress extends it.
- Don't confuse code TT with your total overtime pay — only the premium ('and-a-half') qualifies, and the deduction stops growing once your annual premium exceeds the $12,500 (single) / $25,000 (MFJ) cap.
- State overtime rules that go beyond the FLSA (for example, daily overtime or a higher multiplier) can produce a state-law premium larger than what's federally 'qualified' — only the FLSA-required premium counts for this deduction.
FAQ
Is Box 12 Code TT the same as my full overtime pay?
No — code TT is only the overtime premium (the extra 'and-a-half' of time-and-a-half), not your total overtime wages. If you earned $30/hour for overtime on a $20/hour base rate, only the $10/hour premium counts.
What if my 2025 W-2 doesn't show code TT?
That's expected — code TT first appears on tax year 2026 W-2s (received January 2027). For your 2025 return, use your pay stubs or ask your employer for your FLSA overtime premium total; the IRS granted 2025 transition relief so employers weren't required to separately report it (Notice 2025-62 / Notice 2025-69).
Related W-2 boxes
Box 12 — Codes (401(k), HSA, health coverage, ISO, and more)
Up to four labeled amounts (12a–12d) using IRS codes. Common codes: D (401(k) elective deferral), DD (employer health coverage cost), W (employer + employee HSA contributions), AA (Roth 401(k)).
Box 12 Code D — Elective deferrals to a 401(k) plan
Your traditional (pre-tax) 401(k) elective deferrals. Reduces Box 1 dollar-for-dollar, up to the annual §402(g) elective deferral limit (higher with age-50 catch-up and SECURE 2.0 ages-60–63 super-catch-up).
Box 12 Code DD — Cost of employer-sponsored health coverage
The total cost (employer + employee share) of your employer-sponsored group health coverage. Informational only — does not affect your tax.
Box 12 Code E — Elective deferrals to a 403(b) plan
Your traditional (pre-tax) 403(b) elective deferrals. Reduces Box 1 up to the annual §402(g) limit, with a special 15-year catch-up for long-tenured employees of certain nonprofits.
Reconciling your W-2 at tax time? Use the paycheck calculator to verify expected federal, Social Security, and Medicare withholdings on your salary, and the federal income tax calculator to estimate your refund or balance owing before you file.
Related Calculators
No Tax on Overtime
OBBBA overtime-premium deduction — $12,500 single / $25,000 joint cap, MAGI phaseout from $150k/$300k
Paycheck Calculator
Federal, state, FICA withholding, net take-home, W-4 alignment
Federal Income Tax Calculator
10–37% brackets, $15,750 standard deduction, progressive calculation
W-4 Withholding Calculator
Form W-4 steps, correct federal withholding, avoid penalties
FICA & Social Security
6.2% SS to $176,100, 1.45% Medicare, 0.9% additional Medicare
Tax Refund Estimator
Estimate federal refund, withholding vs liability, adjustments
401(k) Calculator
Contribution limits, employer match, tax-deferred growth
Sources
W-2 box definitions per IRS General Instructions for Forms W-2 and W-3 and IRC §6051. Rates and thresholds current for tax year 2025 (file by April 15, 2026); 2026 figures included where published.