On Aug 6, 2026 the IRS issued Fact Sheet FS-2026-13, replacing its January guidance on OBBBA's new deduction for qualified overtime compensation. Employers must now separately report qualified overtime on Form W-2, Box 12, using Code TT, reporting the full qualifying amount even if the worker's deduction is capped or phased out. Errors require a corrected Form W-2c, and the compliance rules apply for tax years 2026 through 2028.
Home › Founders News › Taxes & Grants
IRS updates overtime-deduction rules: report qualified OT in W-2 Box 12 Code TT
Why this matters for founders
If you pay any FLSA overtime, tell your payroll provider now to enable Box 12 Code TT tracking for 2026 W-2s and don't cut withholding unless the employee files an updated W-4 claiming the deduction.
Source: IRS Newsroom
Related updates
More that helps you.
Starting tax year 2026, employers must separately report tips and overtime on W-2
Under the One Big Beautiful Bill Act, beginning with tax year 2026 employers must separately report qualified tips and qualified overtime on Form W-2 so employees can claim the new…
IRS Notice 2026-28: permanent paid-leave credit adds a premium method for 2026
On Aug 5, 2026 Treasury and the IRS issued Notice 2026-28 implementing OBBBA's permanent Section 45S employer credit for paid family and medical leave. The credit runs 12.5% to 25%…
UK employer NIC stays 15% on a £5,000 threshold for 2026/27; Employment Allowance £10,500
For the 2026/27 tax year (from 6 April 2026), employer Class 1 National Insurance remains at 15% and the secondary threshold at which it becomes payable stays at £5,000 per year, c…
Sweden cuts employer contributions for young hires to 20.81% for 2026 to 2027
From 1 April 2026 through 30 September 2027, Swedish employers pay a reduced payroll tax of 20.81% (vs the ordinary 31.42%) on wages up to SEK 25,000 per month for employees aged 1…
Get briefs like this tuned to you.
In the app, Founder Briefs are personalized to your country, industry and stage, and you can save the ones that matter.
See plans →
Keep exploring
Related across the site
ToolGustoGusto runs full-service payroll for US businesses, handling paychecks, tax filing, and direct deposit, plus benefits, onboarding, and contractor payments. It automates federal, state, and local payroll tax compliance.ToolDocuSignDocuSign lets you send documents for legally binding electronic signature and track their status. It handles contracts, NDAs, offer letters, and other agreements with an audit trail.TermEIN (Employer Identification Number)A unique nine-digit number the US IRS assigns to your business for tax and identification purposes, like a Social Security number for your company.ChecklistHire your first employee the legal wayEverything a first-time employer needs, in order: classification, registration, workers' comp, payroll, and a first week that sets your new hire up to succeed.ChecklistStart a moving company the right wayStart a moving company with the right truck, permits, and pricing, plus the marketing that keeps the calendar full.GuidePlan a new hire's first week rightA new employee's first week sets the tone for everything after. Plan training, checklists, and a 30-day check-in so your first hire ramps up fast and feels set up to win.