Schedule1ADesk / 2026 Tax & Payroll Guides / When Does No Tax on Overtime Start & How to Claim It on Your 2026 Tax Return
When Does No Tax on Overtime Start & How to Claim It on Your 2026 Tax Return
When did No Tax on Overtime take effect and how do you claim it?
Under Public Law 119-21 (One Big Beautiful Bill Act), the federal No Tax on Overtime deduction applies to tax years 2025 through 2028. For the 2026 tax year, employers must separately report your qualified FLSA 0.5x overtime premium in Form W-2 Box 12 using Code TT, and you claim the deduction (up to $12,500 Single / $25,000 Married Filing Jointly) on IRS Schedule 1-A, Part III.
Under Public Law 119-21 (One Big Beautiful Bill Act), the federal No Tax on Overtime deduction applies to tax years 2025 through 2028. For the 2026 tax year, employers must separately report your qualified FLSA 0.5x overtime premium in Form W-2 Box 12 using Code TT, and you claim the deduction (up to $12,500 Single / $25,000 Married Filing Jointly) on IRS Schedule 1-A, Part III.
Open Interactive 2026 Schedule 1-A & W-2 Box 12 Calculator
2026 Form W-2 Box 12 & Schedule 1-A Reference Table
| W-2 Box / IRS Schedule | 2026 Reporting & Deduction Rule |
|---|---|
| Box 12 Code TT (New for 2026) | Qualified FLSA 0.5x Overtime Premium · Deduct up to $12,500 Single / $25,000 MFJ on Schedule 1-A Part III |
| Box 12 Code TP + Box 14b TTOC (New for 2026) | Qualified Voluntary Tips in 75 TTOC Occupations · Deduct up to $25,000 on Schedule 1-A Part II |
| Box 12 Code D / S / E / G | Pre-tax 401(k), SIMPLE IRA, 403(b), and 457(b) deferrals · Lowers MAGI to prevent Schedule 1-A phase-out |
| Box 12 Code W | Employer + Employee pre-tax HSA contributions · Excluded from Box 1 wages and lowers MAGI |
| Box 12 Code DD | Informational cost of employer-sponsored health coverage · Non-taxable |
| Form 1098-VLI (Schedule 1-A Part IV) | Up to $10,000 deduction for interest on new U.S.-assembled passenger vehicles (VIN starts with 1, 4, 5, or 7) |
| Schedule 1-A Part V (Age 65+ Bonus) | $6,000 per spouse age 65+ ($12,000 joint) · Phases out above $75,000 Single / $150,000 MFJ |
Frequently Asked Questions
When did No Tax on Overtime take effect and how do you claim it?
Under Public Law 119-21 (One Big Beautiful Bill Act), the federal No Tax on Overtime deduction applies to tax years 2025 through 2028. For the 2026 tax year, employers must separately report your qualified FLSA 0.5x overtime premium in Form W-2 Box 12 using Code TT, and you claim the deduction (up to $12,500 Single / $25,000 Married Filing Jointly) on IRS Schedule 1-A, Part III.
Do I have to itemize deductions to claim W-2 Box 12 Code TT or Code TP?
No. All four deductions on 2026 IRS Schedule 1-A (Qualified Tips, Qualified Overtime, Auto Loan Interest, and the $6,000 Senior Deduction) are above-the-line deductions available to both Standard Deduction and Itemized filers.