W-2 Updates for 2026

We have some good news: As an employer, your deadline for delivering W-2s to employees is typically January 31. But this year? You have until February 2. 

And that’s good news, because you now have two extra days to understand the W-2 updates for this year. 

The new W-2 updates will have a significant impact on:

  • Employees who earn tips
  • Employees who earn overtime
  • Form W-4
  • Form 1040

Here’s everything you need to know before sending your W-2s this year:

Table of Contents

Tax Changes For Your Employees & Employers 

Changes to Form W-2 for 2026

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Tax Changes For Your Employees & Employers

Before we dive into the changes to Form W-2 itself, we should talk about the new tax regulation updates that impact the form.

Here’s what you should know about:

1. Deductions For Tips

Employees in qualifying tipped occupations can deduct up to $25,000 in qualified tips.

2. Deductions For Overtime

Employees eligible for overtime can deduct up to $12,500 in qualified overtime compensation.

3. New Schedule 1-A (Form 1040)

This form will help employees claim the new deductions on their individual tax returns. See a draft version of the new Schedule 1-A.

4. W-4 Updates

The 2026 version of Form W-4 allows employees to adjust their income tax withholding based on the new deductions, which could increase their take-home pay throughout the year. See the new Form W-4.

 

Changes to Form W-2 for 2026

With those tax updates out of the way, let’s dive into the changes to Form W-2 you should keep an eye on:

1. New Box 12 Codes:

  • TA: Employer contributions to a “Trump account” (a new type of savings account for children). From the W-2 Draft: 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 qualified tips received by the employee—if your company is not a specific service trade or business. Note: Use this amount in determining the deduction for qualified tips on Sch. 1-A (Form 1040).
  • TS: Total amount of qualified tips received by the employee—if your company is a specified service trade or business. Note: Do not use this amount in determining the deduction for qualified tips on Sch. 1-A (Form 1040).
  • TT: Total amount of qualified overtime compensation. Note: Use this amount in determining the deduction for qualified overtime compensation on Sch. 1-A (Form 1040).

2. Box 14 Split:

  • Box 14a – This is simply a new name for the Box 14 you’re already familiar with.
  • Box 14b – This box is dedicated to the “Treasury tipped occupation code”—which is assigned by the Treasury and identifies employees in occupations that are eligible for the new tip deduction. Note: Use this code and the amount of tips reported in box 12 (code TP) in determining the deduction for qualified tips on Sch. 1-A (Form 1040). If the occupation code 000 is used, your cash tips are not qualified tips.

Find Payroll Support for Year-End and Beyond

For accurate year-end Payroll support, contact us. Our team constantly monitors local and federal Payroll updates so you don’t have to. 

Check out our Complete Payroll Service to learn how we provide consistent year-round support so you never have to worry about compliance or tax regulations.