IRS Releases Final 2026 Form W-2 Following OBBBA Changes

The IRS has released the final 2026 Form W‑2 (Wage and Tax Statement) to reflect updates required by Public Law 119‑21, commonly known as the One Big Beautiful Bill Act (OBBBA). These changes were anticipated in earlier drafts, and the final form incorporates additional refinements. While the final instructions have not yet been released, a draft version of the instructions is currently available for reference.

Download the 2026 Form W‑2 and draft instructions here

What’s New on the 2026 Form W-2

1. New Box 12 Codes

Three new Box 12 codes have been added to support reporting under the OBBBA:

• TA – Employer contributions to a Trump account
• TP – Total amount of cash tips reported to the employer
• TT – Total amount of qualified overtime compensation

These codes help ensure that amounts related to tips and overtime are reported accurately for tax purposes.

2. Box 14 Split

Box 14 is now divided into two separate fields:

• Box 14a — Other

Employers may use this field to report miscellaneous items such as state disability insurance taxes withheld, union dues, uniform payments, employee-paid health insurance premiums, nontaxable income, or educational assistance payments.

• Box 14b — Treasury Tipped Occupation Code(s)

Employers will use this field to report up to two Treasury‑issued tipped occupation codes for employees working in tipped roles. These codes are used to determine eligibility for the qualified tips deduction, with the related amounts reported in Box 12 under Code TP.

What This Means for Employers and Employees

For employers:

• Payroll systems must track cash tips and qualified overtime compensation separately for reporting under the new Box 12 codes.
• Employers must identify and apply Treasury Tipped Occupation Codes correctly in Box 14b.
• Box 14a continues to provide a space for miscellaneous informational reporting.

For employees:

• Reporting of tips (Box 12 code TP) and qualified overtime (Box 12 code TT) will support new deductions under the OBBBA, subject to eligibility rules.
• Tipped occupation codes (Box 14b) will help clarify whether the employee’s occupation qualifies for tip-related deductions.

Timing Reminder:

• These changes apply to wages paid in 2026, which will be reported on W‑2s issued in January 2027.
• Employers should monitor IRS updates for the release of the final W‑2 instructions for 2026, which will provide operational guidance.

How Link Compliance Can Help

Link Compliance supports businesses worldwide in staying up to date with payroll, tax reporting, and regulatory requirements. Our team helps ensure that your payroll systems, reporting processes, and compliance practices are accurate and efficient, so you can focus on running your business while minimizing risk and administrative burden.

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Disclaimer:

The information in this article is for general informational purposes only and reflects the IRS’s published 2026 Form W‑2 and draft instructions. It does not constitute legal or tax advice. Employers and employees should consult the official IRS guidance or a qualified tax professional regarding compliance, reporting, and eligibility for deductions under the One Big Beautiful Bill Act (OBBBA).

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Stay compliant and prepared for 2026 with Link Compliance.
Email: info@linkcompliance.com

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