OBBBA Compliance in Texas: W-2 Requirements for Tipped Employees (Conforming)

Texas conforms to the One Big Beautiful Bill Act (OBBBA). Here's what that means for employers with tipped employees in Texas.

Texas follows the federal minimum wage of $7.25/hr and allows the full federal tip credit. As a conforming state, OBBBA deductions apply at both the federal and state level.

State Conformity Status: Conforming

Because Texas conforms to OBBBA, your tipped employees can claim both the federal AND state deductions for qualified tips and overtime premiums. This means the data you report on W-2s directly benefits your employees at both tax levels.

W-2 Reporting Requirements in Texas

Regardless of state conformity, all Texas employers with tipped employees must:

1. Track qualified tips separately — voluntary cash and credit card tips vs. mandatory service charges
2. Calculate the 0.5x overtime premium for each employee's overtime hours
3. Assign a TTOC code to each tipped employee based on their primary role
4. Report on W-2s — Code TP (qualified tips) and Code TT (overtime premium) in Box 12, TTOC code in Box 14b

Key Deadlines

• 2025 (transition year): IRS offers penalty relief for good-faith compliance efforts
• 2026 onwards: Full enforcement — penalties of $60-$680 per incorrect W-2
• January 31: W-2 filing deadline for the prior tax year

Common TTOC Codes for Texas Businesses

The most common tipped occupations in Texas include:

• FB01 — Waiter/Waitress
• FB02 — Bartender
• FB08 — Barista
• HL06 — Valet Parking
• PC01 — Hairdresser/Stylist

See the complete TTOC code list for all occupation categories.

Related Guides

• What Is OBBBA? Complete Employer Guide
• IRS Penalties for Incorrect W-2s
• Complete TTOC Code List
• Qualified Tips vs. Service Charges

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