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W-2 box 12 code TT: how qualified overtime is calculated for 2026

Last reviewed October 6, 2026, against FS-2026-13 (August 2026) and the 2026 W-2/W-3 instructions.

Starting with tax year 2026, employers must report qualified overtime compensation on Form W-2 in box 12 with code TT. The amount is not total overtime pay. It is only the FLSA-required premium: the “half” of time-and-a-half.

General information, not tax or legal advice. The employer remains responsible for its Forms W-2. IRS FAQs are not binding law. Check your facts with a CPA or your payroll provider. Halfmark is not affiliated with the IRS.

The formula

For most employees, the IRS says qualified overtime compensation is determined each workweek (FS-2026-13, Q12):

FLSA hours worked over 40 in the workweek × ½ × the employee's FLSA regular rate = qualified overtime for the week

The 2026 W-2/W-3 instructions describe code TT the same way: “only the ‘half’ portion of ‘time-and-a-half’ compensation would be reported using code TT” (2026 General Instructions for Forms W-2 and W-3, box 12, code TT). Code TT is the year's total of the weekly amounts, by pay date: the IRS applies the same principles that decide when wages are paid for withholding (FS-2026-13, Q3).

Example 1: hourly employee, no other pay

An employee earning $20 an hour works 46 hours in a workweek and is paid $800 regular pay plus $180 overtime (6 × $30).

Regular rate$20.00
Hours over 406
Code TT for the week6 × ½ × $20 = $60.00

The other $120 of the $180 overtime pay is straight time for the overtime hours and is not part of code TT.

The workweek is fixed, and weeks are never averaged

A workweek is a fixed, regularly recurring period of 168 hours (7 consecutive 24-hour periods). It can start on any day and hour the employer sets, and each workweek stands alone: hours are not averaged over two or more weeks (FS-2026-13, Q13). A biweekly pay period with 30 hours in one week and 50 in the other has 10 overtime hours, not zero. This is why Halfmark needs daily or weekly hours when a pay period is longer than a week.

The regular rate is not always the hourly rate

The FLSA regular rate is all pay for employment in the week, except the payments the FLSA excludes, divided by the hours actually worked (FS-2026-13, Q15; 29 U.S.C. 207(e)). Non-discretionary bonuses, commissions, shift differentials and the tip credit raise it. Paid time off, discretionary bonuses, expense reimbursements and true overtime premiums do not. See regular rate with bonuses and the tip credit.

Example 2: two hourly rates in the same week

30 hours at $15 and 15 hours at $21: total straight-time pay $765 for 45 hours. Regular rate $765 ÷ 45 = $17.00 (weighted average, 29 CFR 778.115). Code TT: 5 × ½ × $17 = $42.50.

Overtime the FLSA doesn't require is not code TT

Only the amount minimally necessary to satisfy 29 U.S.C. 207 counts. The IRS example: 50 hours at $20, overtime paid at double time ($400 for the 10 overtime hours). Only $300 was required ($200 straight time plus a $100 premium), so qualified overtime is $100 (FS-2026-13, Q16). The same applies to state daily overtime, overtime after fewer than 40 hours, and weekend or holiday premiums: see California daily overtime and double time.

Where an employer relies on creditable overtime premiums (such as daily overtime) to meet the FLSA requirement, the formula equals the credited portion of those premiums plus any additional FLSA premium paid (FS-2026-13, Q12).

Who has no code TT

Report the full amount

Code TT is the total qualified overtime paid, even above the $12,500 deduction limit; the limit is applied on the employee's Schedule 1-A (FS-2026-13, Q10, Q19). An employee can't deduct qualified overtime that isn't on Form W-2 or W-2c (FS-2026-13, Q20, Q22), and can't use an overstated amount (Q21). Errors are corrected with Form W-2c (Q11): see correcting code TT or TP.

Check your payroll data against these rules: import registers and hours, recompute code TT per workweek, and compare with your provider. Runs in your browser; payroll data is not uploaded.

Open the worksheet

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