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W-2 Box 12 Code TT Calculator

Work out each employee's qualified overtime compensation — the amount employers must report in box 12 with code TT on 2026 Forms W-2 (due to employees by February 1, 2027).

Estimates for standard FLSA overtime. This follows the IRS formula for overtime over 40 hours in a workweek. It isn't tax or legal advice, and it doesn't cover special pay systems (see the limits below). Nothing you enter leaves your browser.

1. One workweek

Hours worked at each straight-time rate

Include overtime hours at their normal rate. Add a line for each different rate (for example, two jobs or a shift differential paid per hour).

Nondiscretionary bonuses, commissions, lump-sum differentials for this week.

Hours not listed above — e.g. a salaried nonexempt employee on a fluctuating workweek (enter the salary as other pay).

Qualified overtime for this week (code TT)

$0.00

Total hours
0
Overtime hours
0
Pay in the regular rate
$0.00
FLSA regular rate
—
Minimum FLSA overtime pay owed for those hours (1.5×)
$0.00

    2. A full year from your payroll records (CSV)

    One row per employee per workweek (or several rows for the same week if someone worked at different rates). Code TT is the sum of each week's qualified overtime — weeks are never averaged together.

    Columns: employee, week, hours (all hours worked that week), straight_pay (pay for all those hours at straight-time rates), optional extra_pay (nondiscretionary bonuses, commissions). Example rows are filled in.

    Box 12, code TT by employee

      EmployeeWeeksWeeks with OTOT hoursCode TT
      Total

      3. Bonus true-up (quarterly or annual nondiscretionary bonus)

      A nondiscretionary bonus paid at the end of a period raises the regular rate for every week it covers. If you can't tie it to specific weeks, the regulation allows spreading it evenly over every hour of the period. Add the result to that employee's code TT.

      Additional qualified overtime: $0.00

      What code TT is

      The 2025 tax law created a temporary federal income tax deduction for qualified overtime compensation (tax years 2025–2028). Starting with tax year 2026, employers must report the total for each employee in Form W-2, box 12, with code TT. For 2026 and later, employees generally can only deduct what appears there — if it's missing or too low, they have to ask you for a corrected W-2c.

      Report the full amount you paid. The employee's own cap ($12,500, or $25,000 on a joint return) and income phase-out are applied on their tax return, not on the W-2.

      The formula

      For each workweek, per IRS Fact Sheet FS-2026-13:

      hours over 40 in the workweek × ½ × FLSA regular rate = qualified overtime for that week

      The FLSA regular rate is all pay for employment in the week (minus the exclusions below) divided by all hours actually worked that week. Code TT is the sum of the weekly amounts.

      Worked examples

      • One rate. 50 hours at $20. Overtime hours: 10. Regular rate: $20. Code TT for the week: 10 × ½ × $20 = $100. That's true even if you paid double time — only the FLSA-required half counts.
      • Two rates. 30 hours at $15 and 15 hours at $21 = $765 for 45 hours. Regular rate: $765 ÷ 45 = $17. Code TT: 5 × ½ × $17 = $42.50.
      • Weekly bonus. 46 hours at $18 ($828) plus a $92 production bonus = $920. Regular rate: $920 ÷ 46 = $20. Code TT: 6 × ½ × $20 = $60.

      What goes into the regular rate — and what doesn't

      Include: hourly wages, salary for nonexempt employees, shift differentials, nondiscretionary bonuses (attendance, production, retention bonuses promised in advance), commissions and piece-rate pay.

      Exclude (DOL Fact Sheet #56A): pay for time not worked (vacation, holiday, sick pay), discretionary bonuses, gifts, expense reimbursements, bona fide profit-sharing and benefit-plan contributions, and premium pay that already counts as overtime under a daily or contract rule.

      Common mistakes

      • Reporting the whole overtime check. Code TT is only the half-time premium, not 1.5× pay.
      • Using pay periods instead of workweeks. A biweekly check covers two separate workweeks. 30 hours one week and 50 the next is 10 overtime hours, not zero.
      • Counting state daily overtime or double time. Overtime that state law or company policy requires beyond the FLSA (e.g. California's daily overtime) is not qualified overtime.
      • Leaving bonuses out of the regular rate. A nondiscretionary bonus raises the premium on every overtime hour in the weeks it covers.
      • Reporting for exempt employees. Employees exempt from FLSA overtime have no qualified overtime, even if you pay them extra for long hours.

      Limits of this calculator

      It covers standard FLSA section 7(a) overtime on a 40-hour workweek. It doesn't model hospital "8 and 80" schedules (section 7(j)), public-sector fire and police schedules (7(k)), compensatory time (7(o)), or the "rate in effect" method under 29 CFR 778.419. If your payroll provider already reports code TT, compare its numbers with these rather than replacing them.

      Sources

      Last reviewed: November 9, 2026. Rules for tax years 2025–2028 may be updated by new IRS guidance.

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