As we move closer to 2026, employers must stay informed about new reporting requirements and deadlines—especially those related to Form W-2, Wage and Tax Statement. All states that require income tax withholding continue to mandate that employers provide Form W-2 to employees, regardless of whether federal or state income taxes were withheld. The IRS has released draft versions of the 2026 Form W-2 and Form W-2C, which include several notable changes stemming from the One Big Beautiful Bill Act (OBBBA). These updates reflect new deductions and reporting obligations for employers. Below is a summary of the proposed updates:
Key Highlights of 2026 W-2 and W-2C Changes
- New Box 14b Added: Employers must report a “Treasury tipped occupation code” for tipped employees. IRS-assigned codes are pending release.
- Box 14 Renumbered: The current Box 14 becomes Box 14a, making room for the new 14b field.
- New Box 12 Codes Introduced under the One Big Beautiful Bill Act
- New IRS Schedule 1-A: Employees will use this new form with their 1040 to claim deductions related to the new W-2 codes.
- 2026 W-2C Changes: The corrected form now includes Box 14b and aligns with the updated W-2 layout for accurate corrections.
2026 W-2 Draft Changes
New Box 14b
Labeled “Treasury tipped occupation code”, this field will require employers to report an IRS-assigned occupation code for tipped employees (codes pending release).
Renumbering
The existing Box 14 will become Box 14a.
New Box 12 Codes
Three codes have been added under provisions of the One Big Beautiful Bill Act:
- TA – Employer contributions to Trump accounts
- TP – Tips subject to the deduction
- TT – Overtime pay subject to the deduction
Employees will eventually claim these deductions using a new Schedule 1-A with Form 1040.
2026 W-2C Draft Changes
New Box 14b Included
The corrected form now allows for updates to the Treasury tipped occupation code, mirroring the new W-2 requirement.
Alignment of Corrections
As with prior versions, each corrected item is shown alongside its “previously reported” value, now extended to include the new Box 14a and Box 14b.
Draft forms are available here for reference:
- W-2 Draft (IRS): https://www.irs.gov/pub/irs-dft/fw2–dft.pdf
- W-2C Draft (IRS): https://www.irs.gov/pub/irs-dft/fw2c–dft.pdf
Key Deadlines for Form W-2
For income earned in 2025, employers must meet the following deadlines:
- January 31, 2026: Furnish Form W-2 to employees and file with the SSA.
- January 31, 2026: Submit Form W-3 (transmittal form) to the SSA along with the W-2s.
Missing these deadlines can result in penalties ranging from $60 to $310 per form, with a maximum of $3.78 million annually for large businesses.
Why W-2 Changes Matter for Employers and Employees
Staying on top of W-2 changes is essential for employers—not just to meet IRS and SSA requirements, but to foster a smooth and transparent payroll experience for employees.
- Compliance and Risk Management: Each year brings new W-2 changes that impact how income, deductions, and benefits are reported. Employers who fail to adapt risk penalties, audits, and delays in filing. Accurate W-2 reporting ensures compliance with federal and state tax laws and helps avoid costly corrections.
- Employee Trust and Satisfaction: Timely and accurate W-2 forms give employees confidence in their paychecks and tax filings. When employers reflect the latest W-2 changes correctly, it reduces confusion, prevents under- or over-withholding, and supports a positive workplace experience.
Understanding and implementing annual W-2 changes is more than a tax obligation—it’s a strategic move that protects your business and supports your workforce.