It is important to know that Qualified Overtime Pay must be reported on
Form W2 for 2026. Here are some quick facts to guide you:

WHO: As part of the One Big Beautiful Bill Act, eligible taxpayers can
deduct the amount of qualified overtime from their income on their
personal tax returns.

WHAT: What is qualified overtime? The “premium” portion of
overtime pay- this is the half-time portion of the overtime pay.

WHERE: Employers must report the amount of qualified overtime
paid in Box 12 using Code TT.

WHEN: Compliance with this mandatory reporting starts in 2026 and
must be on that year’s W2 forms that will be issued in January 2027.
As employers, you should begin now to make sure you are ready to
comply with this mandate. Check with your payroll provider to make
sure they have systems in place to track the qualified overtime and
will be able to report it properly on the W2s at the end of the year.
If your employees have questions, be ready to explain that your
company will provide the reporting on their W2 and refer them to
a tax professional for any other questions.

Holbrook & Manter’s Business Services & Solutions team is
available to provide answers and guidance on qualified overtime or
any questions about the One Big Beautiful Bill Act. Reach out to us today.