W-2 Box 12 Codes TP and TT: What Employers Need to Report

Starting with tax year 2025, employers must report two new amounts in W-2 Box 12 for tipped employees and employees who work overtime.

Code TP — Qualified Tips

Report the total qualified tip income for the calendar year. This includes:

• Cash tips reported by the employee
• Credit card tips processed through your POS
• Any other voluntary tip income

Do NOT include mandatory service charges, auto-gratuity, or banquet fees.

Code TT — Qualified Overtime Premium

Report the total qualified overtime premium for the calendar year. This is calculated as:

Overtime Hours × Regular Hourly Rate × 0.5

Only the 0.5x premium portion qualifies — not the full 1.5x overtime pay.

Who Gets These Codes?

• Code TP: Any employee with qualified tip income. Must also have a TTOC code in Box 14b.
• Code TT: Any employee who worked FLSA-required overtime (over 40 hours/week). This applies to ALL employees, not just tipped ones.

2025 Transition Relief

The IRS has offered transition relief for tax year 2025. Employers can use "reasonable methods" to estimate qualified amounts, and penalties for good-faith errors will not be assessed. Starting in 2026, the full reporting requirements apply with standard penalty enforcement.

Common Questions

Can an employee have both TP and TT?

Yes. A tipped employee who also works overtime gets both codes on their W-2.

What if tips are pooled?

Report the qualified tip amount each employee actually receives from the pool, not the total pool amount.

What about salaried tipped employees?

If a salaried employee receives tips (e.g., a salaried maitre d'), their qualified tip income is still reported under Code TP. Code TT only applies if they're overtime-eligible.

Related Guides

• Qualified Tips vs. Service Charges
• How to Calculate the OT Premium
• Complete TTOC Code List
• IRS Penalties for Incorrect W-2s