On January 9, 2026, the Internal Revenue Service finalized the 2026 Form W-2, Wage and Tax Statement, formally implementing reporting changes required under Public Law 119-21, also known as the One Big Beautiful Bill Act (OBBBA). The final form largely reflects changes previewed in earlier drafts, with one important clarification related to tipped occupation reporting.
While the final instructions have not yet been released, a draft version is available, and the form itself is now official. Employers should begin preparing systems and processes to support these updates ahead of the 2026 filing season.
Key Changes in the Final 2026 Form W-2
New Box 12 Codes
The finalized 2026 Form W-2 introduces three new Box 12 codes tied directly to OBBBA provisions:
TA – Employer contributions under a section 128 Trump account contribution program paid to a Trump account of an employee or a dependent of an employee
TP – Total amount of cash tips reported to the employer that may be eligible for the OBBBA deduction
TT – Total amount of qualified overtime compensation
These codes support new above-the-line deductions that employees will calculate as part of their individual income tax filings.
Box 14 Is Now Split Into 14a and 14b
Box 14a – Other: Employers may continue to report miscellaneous informational items such as state disability insurance taxes, union dues, uniform payments, health insurance premiums, educational assistance, or other non-taxable income.
Box 14b – Treasury Tipped Occupation Code(s): Employers will report up to two Treasury-issued tipped occupation codes that identify whether an employee’s role qualifies for the deduction for qualified tips.
These occupation codes are used in combination with Box 12 code TP to determine tip deduction eligibility.
Clarification on Code “000” in Box 14b
One notable clarification was added in the final W-2 employee instructions.
Only when Box 14b reports code “000” by itself does it indicate that an employee’s tips are not eligible for the OBBBA tip deduction.
This distinction is important for employees with multiple tipped roles or occupation codes, ensuring that eligibility is not incorrectly disallowed due to partial or mixed reporting.
Distinguishing Deductible vs. Non-Deductible Tips
Earlier drafts introduced new reporting mechanics that are now reflected in the final form.
Code TP is used to report cash tips when the employer is not a specified service trade or business (SSTB), and those tips may qualify for the deduction.
Code TS applies to tips that do not qualify for the deduction when the employer is an SSTB, as defined under Internal Revenue Code sections 199A and 1202.
Employers must correctly classify their business type and tip eligibility to ensure accurate reporting.
Territorial Forms
The IRS also released finalized versions of Form W-2AS (American Samoa) and Form W-2GU (Guam) on January 12, 2026. The finalized Form W-2VI (U.S. Virgin Islands) was not immediately available at the time of release.
What This Means for Employers
With the 2026 Form W-2 now finalized, employers should begin reviewing payroll systems, tip reporting processes, and occupation coding practices to ensure alignment with the new requirements.
While the form itself is final, the final instructions have not yet been issued, and employers should continue monitoring IRS guidance for additional clarification.
Looking Ahead
The finalized 2026 Form W-2 represents a significant shift in wage reporting, particularly for tipped and overtime compensation. These changes increase reporting precision and reinforce the connection between payroll data and employee tax benefits under OBBBA.
Employers that prepare early by validating data flows, updating payroll logic, and educating internal teams will be best positioned for a smooth 2026 filing season.
View the final 2026 Form W-2: https://www.irs.gov/pub/irs-pdf/fw2.pdf