What code TT shows
Starting with 2026, employers must report qualified overtime compensation on Form W-2 in box 12 with code TT. That is the overtime required by the Fair Labor Standards Act that is above your regular rate: on time-and-a-half, the extra half. Employers report the full amount even if it is more than the deduction limit.
$24 an hour, 400 overtime hours in 2026 at $36.
Overtime pay: $14,400. Code TT amount: 400 × $12 = $4,800.
That $4,800 goes on Schedule 1-A, which applies the limits and gives your deduction.
For 2026, only the code TT amount counts
The law allows the deduction only for qualified overtime included on your W-2. For 2025 the IRS waived that requirement, so many people worked out the amount from pay stubs. The IRS says no relief is available for tax years after 2025: you may not count any qualified overtime above what box 12, code TT shows.
If the amount is missing or too low
- Check your pay records. Add up the extra half for each overtime hour over 40 in a workweek. The overtime pay calculator shows it.
- Ask your employer for a Form W-2c that reports the overtime in box 12 with code TT. Employers must correct errors they find on box 12, code TT.
- Use the corrected amount on Schedule 1-A once you have the W-2c. If it arrives after you filed, file an amended return (Form 1040-X) to add the deduction.
If your employer is unwilling or unable to send a W-2c, the IRS says you can use only the amount on the W-2 you have, even if you were paid more. A substitute W-2, Form 4852, can't be used for this deduction. (The rare worker paid overtime on a Form 1099 instead of a W-2 uses the amount the 1099 reports.)
If the amount is too high
You can count only the qualified overtime you were actually paid. If code TT shows $10,000 but you were paid $5,000, you may include no more than $5,000 on Schedule 1-A. Ask your employer to correct it.
Other conditions
- You need a Social Security number valid for employment, issued by your return's due date, including extensions.
- If you are married, you must file a joint return.
- The deduction is up to $12,500 ($25,000 joint), reduced above $150,000 of income ($300,000 joint).
Estimate your deduction with the no tax on overtime calculator (choose "W-2 code TT"), then fill in Schedule 1-A.
Common questions
What is code TT on my W-2? Box 12, code TT is the qualified overtime compensation your employer paid you: the part of your overtime required by federal law that is above your regular rate, usually the extra half in time-and-a-half. Employers must report it starting with 2026 W-2s.
Can I deduct overtime that isn't in box 12, code TT? Not for 2026 through 2028. The IRS says employees may not count any qualified overtime above what is reported in box 12, code TT. The relief that let people work it out from pay stubs applied to 2025 only.
My employer left overtime off my W-2. What do I do? Ask your employer for a Form W-2c, a corrected W-2, that reports the overtime in box 12 with code TT. Employers must correct W-2 errors they find. If the employer won't or can't, you can deduct only what the original W-2 shows.
Can I use Form 4852 instead? No. The IRS says a substitute W-2 (Form 4852) doesn't meet the reporting requirement, so overtime on it can't be used for the deduction.
Is the whole code TT amount deductible? Not always. Schedule 1-A starts from the code TT amount and then applies the $12,500 limit ($25,000 joint) and the reduction above $150,000 of income ($300,000 joint). If the code TT amount is too high, you can count only what you were actually paid.
Updated November 5, 2026. Source: IRS FS-2026-13, questions and answers about the deduction for qualified overtime compensation (questions 10, 11 and 19 to 25, August 6, 2026); Internal Revenue Code §225.