IRS Publishes Draft Revised Form W-2 in Response to No Tax on Tips and No Tax on Overtime Reporting Requirements
On July 4, 2025, President Trump signed into law the so-called “One Big Beautiful Bill Act.” The Act established new above-the-line tax deductions for “qualified tips” and “qualified overtime compensation.” To facilitate these deductions, the Act requires employers to include on the Form W-2: (a) the total amount of cash tips reported by the employee, as well as the employee’s qualifying tipped occupation; and (b) the total amount of qualified overtime compensation . On August 7, 2025, the IRS announced that Form W-2 “will remain unchanged” for tax year 2025, leaving employers with no further information on how to comply with the Act’s reporting requirements. Just one week later, however, the IRS published a draft of the 2026 W-2. Along with other changes associated with the Act, the form instructions direct employers to use Box 12 to report the employee’s “qualified tips” using code “TP” and “qualified overtime compensation” using code “TT.” Th...