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Tax year 2026. Federal, FICA, and state rules last checked . How we calculate

W-2 Box 12 codes: what each code means

Box 12 is where your employer reports amounts that don’t fit anywhere else on your W-2: retirement savings, health benefits, and, starting with the One Big Beautiful Bill Act, your qualified tips and overtime. Find your code below to see what it is and whether it changes your tax return.

By NetWageTax. Last reviewed . Sources: IRS instructions and the statute.

Every Box 12 code, A to TT

Each entry on your W-2 is a code and a dollar amount. Not in Box 1 means the amount was left out of your taxable wages, usually because it went into a pre-tax account. Already in Box 1 means it’s part of your taxable wages, so don’t add it again. Tax you owe means you pay something extra with your return.

  • Code A: Uncollected Social Security tax on tips

    Tax you owe

    Your tips were larger than the wages your employer could withhold from, so part of the Social Security (or Railroad Retirement) tax on those tips wasn’t collected.

    What to do: You owe it. Report it on Schedule 2 and pay it with your return.

  • Code B: Uncollected Medicare tax on tips

    Tax you owe

    The same as Code A, for the Medicare tax on your tips.

    What to do: You owe it. Report it on Schedule 2 and pay it with your return.

  • Code C: Group-term life insurance over $50,000

    Already in Box 1

    Life insurance your employer pays for is a taxable benefit once coverage passes $50,000. This is the taxable cost of the coverage above that amount.

    What to do: Nothing to do. It’s already counted in Boxes 1, 3, and 5.

  • Code D: 401(k) contributions

    Not in Box 1

    The pre-tax amount you chose to put into your 401(k), including a SIMPLE 401(k). It’s left out of your taxable wages in Box 1 but still counts for Social Security and Medicare (Boxes 3 and 5).

    What to do: Nothing to enter. Your Box 1 wages already reflect it. It can matter for the Saver’s Credit (Form 8880).

  • Code E: 403(b) contributions

    Not in Box 1

    Pre-tax contributions to a 403(b) plan, the retirement plan used by schools, hospitals, and nonprofits.

    What to do: Nothing to enter. Treated like Code D.

  • Code F: SARSEP contributions

    Not in Box 1

    Pre-tax contributions to a salary reduction SEP (SARSEP) under section 408(k)(6), an older small-employer retirement plan.

    What to do: Nothing to enter. Treated like Code D.

  • Code G: 457(b) contributions

    Not in Box 1

    Pre-tax deferrals, and any employer contributions, to a 457(b) deferred compensation plan, common for state and local government workers.

    What to do: Nothing to enter. It’s already left out of Box 1.

  • Code H: 501(c)(18)(D) plan contributions

    Already in Box 1

    Contributions to a pension plan created before June 25, 1959, and funded only by employee contributions. Unlike a 401(k), these are included in your Box 1 wages.

    What to do: You can deduct the amount as an adjustment to income on Schedule 1.

  • Code J: Nontaxable sick pay

    Not in Box 1

    Sick pay that isn’t taxable, usually because you paid the premiums for the disability policy with after-tax money.

    What to do: Nothing to do. It isn’t in Box 1.

  • Code K: Excise tax on golden parachute payments

    Tax you owe

    The 20% excise tax your employer withheld on excess golden parachute payments, made when a company changes ownership.

    What to do: Report it on Schedule 2.

  • Code L: Business expense reimbursements

    Not in Box 1

    Travel, mileage, or per diem reimbursements you accounted for to your employer, up to the federal rate. Anything paid above that rate is already in Box 1.

    What to do: Nothing to do. These reimbursements aren’t taxable.

  • Code M: Uncollected Social Security tax on group-term life insurance

    Tax you owe

    For former employees: Social Security (or RRTA) tax on group-term life insurance coverage over $50,000 that your employer couldn’t collect.

    What to do: You owe it. Report it on Schedule 2 and pay it with your return.

  • Code N: Uncollected Medicare tax on group-term life insurance

    Tax you owe

    For former employees: the same as Code M, for the Medicare tax.

    What to do: You owe it. Report it on Schedule 2 and pay it with your return.

  • Code P: Military moving expense reimbursements

    Not in Box 1

    Moving expenses your employer paid or reimbursed for a member of the U.S. Armed Forces on active duty who moved because of a military order.

    What to do: Nothing to do. They aren’t taxable.

  • Code Q: Nontaxable combat pay

    Not in Box 1

    Military pay earned in a combat zone, which isn’t taxable.

    What to do: Not taxed, but you can choose to count it as earned income for the Earned Income Tax Credit if that gives you a bigger credit.

  • Code R: Archer MSA contributions

    Not in Box 1

    Employer contributions to an Archer medical savings account.

    What to do: Report them on Form 8853.

  • Code S: SIMPLE IRA contributions

    Not in Box 1

    The pre-tax amount you chose to put into a SIMPLE IRA through payroll.

    What to do: Nothing to enter. It’s already left out of Box 1.

  • Code T: Adoption benefits

    Not in Box 1

    Adoption expenses your employer paid or reimbursed under an adoption assistance program. They’re left out of Box 1, but only up to the yearly limit.

    What to do: Fill out Form 8839 to figure how much is tax-free. Any amount over the limit is added to your wages.

  • Code V: Stock option income

    Already in Box 1

    The income from exercising nonstatutory stock options: the difference between the stock’s value and the price you paid.

    What to do: Already in Boxes 1, 3, and 5. Keep it to figure your cost basis when you sell the shares.

  • Code W: Health Savings Account (HSA) contributions

    Not in Box 1

    Your employer’s contributions to your HSA, plus anything you put in pre-tax through payroll.

    What to do: Report it on Form 8889, which checks that total contributions stayed within the annual limit.

  • Code Y: Section 409A deferrals

    Informational

    Pay you deferred into a nonqualified deferred compensation plan. Employers aren’t required to report it.

    What to do: Nothing to do.

  • Code Z: Income from a plan that fails section 409A

    Tax you owe

    Deferred compensation that became taxable because the plan didn’t meet the section 409A rules.

    What to do: Already in Box 1. You also owe an extra 20% tax plus interest, reported on Schedule 2.

  • Code AA: Roth 401(k) contributions

    Already in Box 1

    After-tax contributions you made to a designated Roth account in your 401(k).

    What to do: Nothing to enter. They’re already in Box 1.

  • Code BB: Roth 403(b) contributions

    Already in Box 1

    After-tax contributions you made to a designated Roth account in your 403(b).

    What to do: Nothing to enter. They’re already in Box 1.

  • Code DD: Cost of employer health coverage

    Informational

    The total cost of your employer-sponsored health insurance, including both your share and your employer’s. It’s reported so you know what your coverage costs.

    What to do: Nothing to do. It isn’t taxable and you don’t enter it anywhere.

  • Code EE: Roth 457(b) contributions

    Already in Box 1

    After-tax contributions you made to a designated Roth account in a governmental 457(b) plan.

    What to do: Nothing to enter. They’re already in Box 1.

  • Code FF: Small employer HRA (QSEHRA) benefits

    Informational

    The yearly amount you could get from a qualified small employer health reimbursement arrangement.

    What to do: If you buy Marketplace coverage, it can lower your Premium Tax Credit (Form 8962).

  • Code GG: Section 83(i) equity grant income

    Already in Box 1

    Income from stock received under a qualified equity grant whose tax you had deferred under section 83(i).

    What to do: Already in Box 1.

  • Code HH: Section 83(i) deferrals

    Informational

    The total amount you’ve deferred under section 83(i) elections, as of the end of the year.

    What to do: Nothing to do.

  • Code II: Medicaid waiver payments

    Not in Box 1

    Payments for caring for someone in your home under a Medicaid waiver program, excluded from income under IRS Notice 2014-7.

    What to do: Not in Box 1. You may still choose to count them as earned income for the Earned Income Tax Credit.

  • Code TA: Trump Account contributions

    Informational

    Your employer’s contributions to a Trump Account, a savings account for a child created by the One Big Beautiful Bill Act.

    What to do: Generally not taxable up to $2,500 a year. It has nothing to do with tips or overtime. Full explanation of Code TA

  • Code TP: Qualified tips

    New deduction

    Tips your employer identified as qualified for the federal “no tax on tips” deduction.

    What to do: Starting amount for Schedule 1-A, Part II. You apply the $25,000 cap and the income phase-out yourself. Full explanation of Code TP

  • Code TT: Qualified overtime

    New deduction

    The overtime premium (the extra “half” in time-and-a-half) that qualifies for the federal overtime deduction.

    What to do: Starting amount for Schedule 1-A, Part III. You apply the $12,500 cap and the income phase-out yourself. Full explanation of Code TT

What Box 12 is

Form W-2 reports your wages and the taxes withheld from them. Boxes 1 through 11 cover the big numbers: taxable wages, Social Security and Medicare wages, and withholding. Box 12 is for everything else your employer is required to report, identified by a one- or two-letter code followed by a dollar amount.

Box 12 has room for four entries (12a through 12d). If your employer needs to report more, you’ll receive a second W-2 with the additional codes. The code tells you what the amount is. It doesn’t tell you whether the amount is taxable. Some Box 12 amounts are already included in your Box 1 wages, some are excluded, and some are purely informational. The code list sorts every code into those groups.

The new codes: TA, TP, and TT

The One Big Beautiful Bill Act (H.R. 1, Public Law 119-21), signed on July 4, 2025, created two temporary federal income tax deductions, one for qualified tips and one for qualified overtime, available for tax years 2025 through 2028. It also created Trump Accounts, a new savings account for children. To give workers the numbers they need, the IRS added three Box 12 codes to Form W-2.

Two of them, TP and TT, are the starting point for the new deductions. Both are claimed on the new Schedule 1-A and carry to Form 1040. They’re available whether you take the standard deduction or itemize. They lower your taxable income, not your adjusted gross income (AGI), and they don’t reduce Social Security or Medicare (FICA) taxes.

Code TP: qualified tips

Code TP reports the tips your employer identified as qualified tips: voluntary cash or charged tips paid by customers, received in an occupation that customarily and regularly received tips on or before December 31, 2024. The Treasury Department publishes the list of qualifying occupations. Mandatory service charges, such as an automatic 18% gratuity for large parties, are not qualified tips.

  • Cap: up to $25,000 per return. The cap is the same for joint filers; it doesn’t double.
  • Income phase-out: the deduction shrinks by $100 for every full $1,000 of modified AGI above $150,000 ($300,000 if married filing jointly).
  • Who qualifies: you need a valid Social Security number, and married couples must file jointly. Self-employed workers can also qualify, unless the tips come from a specified service trade or business (such as health, law, or consulting).

Your employer reports the full qualified amount. They don’t apply the $25,000 cap or the phase-out; you apply those on Schedule 1-A.

Code TT: qualified overtime

Code TT reports qualified overtime compensation: overtime pay required by Section 7 of the Fair Labor Standards Act (FLSA), usually hours over 40 in a workweek. Only the premium portion counts, meaning the pay above your regular rate. For time-and-a-half, that’s the extra “half.”

Example: you earn $20 an hour and work 10 overtime hours at $30 an hour. Your overtime pay is $300, but your qualified overtime is only $100 (10 hours × the $10 premium). Code TT should show $100.

  • Cap: up to $12,500 per return, or $25,000 if married filing jointly.
  • Income phase-out: the same $100-per-$1,000 reduction above $150,000 ($300,000 joint).
  • Who qualifies: employees who are non-exempt under the FLSA. Overtime that’s paid under a union contract or state law, but not required by the FLSA, doesn’t qualify.

Code TA: Trump Account contributions

Code TA reports contributions your employer made to a Trump Account, a tax-advantaged investment account for a child created under new IRC §530A. Employers can contribute up to $2,500 a year per employee, and that amount is generally excluded from your income. Contributions to these accounts can begin in July 2026.

Code TA has nothing to do with tips or overtime. Don’t enter it in a tips or overtime calculator or on Schedule 1-A.

2025 vs. 2026 Forms W-2

The deductions apply to tax year 2025, but the law passed mid-year, after payroll systems were set. For 2025, the IRS kept Form W-2 unchanged and gave employers transition relief. Many employers reported qualified tips and overtime in Box 14 or on a separate statement instead of in Box 12. If your 2025 W-2 has no TP or TT code, look there, or use your final pay stub, and ask your payroll department if you’re unsure.

The redesigned 2026 Form W-2, which you’ll receive in early 2027, carries Codes TA, TP, and TT in Box 12. It also splits Box 14, adding a separate box (14b) for the Treasury tipped occupation code that identifies your tipped job.

Common mistakes

  • Entering total overtime pay instead of the premium. Code TT is only the extra half. If your pay stub shows $6,000 of overtime at time-and-a-half, the qualified amount is $2,000.
  • Adding Box 12 amounts to your wages. Codes like D, W, and DD don’t increase your taxable income. Box 1 already reflects the right number.
  • Assuming the cap is applied for you. Your employer reports the full TP and TT amounts. The $25,000 and $12,500 caps and the income phase-out are applied on your return.
  • Expecting lower payroll taxes. The deductions reduce federal income tax only. Social Security and Medicare still apply to 100% of your tips and overtime, and most states still tax them.
  • Filing separately. Married couples must file jointly to claim either deduction.

Sources and review

This guide is written and reviewed by NetWageTax from primary sources: the statute and IRS forms, instructions, and guidance. It is educational information, not tax advice. For your situation, confirm with the official Form W-2 and Schedule 1-A instructions or a CPA or enrolled agent.

Spotted something out of date? Email contact@netwagetax.com and we’ll review it.