Box 12 is where most W-2 questions start, because it holds amounts that don't fit the wage boxes: retirement deferrals, health benefits, reimbursements and, from the 2026 form, overtime and tips for the new federal deductions. This post lists every code in the IRS General Instructions for Forms W-2 and W-3 (2026), explains the three new ones, and shows how to handle an employee with more than four.
How box 12 works
Each entry is a capital-letter code and an amount, written left and right of the vertical line in boxes 12a to 12d. The code is required even if there is only one entry. Amounts use a decimal point but no dollar sign or comma, so $5,300 of 401(k) deferrals is entered as D 5300.00, in whichever slot comes first.
The slots don't mean anything: code D doesn't have to go in 12d. What matters is the code. On Copy A, the copy filed with the Social Security Administration, you may enter no more than four items. Employee copies printed on an approved substitute form may show more, and an electronic file uploaded to the SSA can include every type in one record.
Form W-3 doesn't add up every code. Its box 12a totals only the deferral codes D to H, S, Y, AA, BB and EE. The rest of the box 12 amounts are reported on the W-2s alone.
Every W-2 box 12 code for 2026
| Code | What it reports |
|---|---|
| A | Uncollected Social Security or RRTA tax on tips |
| B | Uncollected Medicare tax on tips |
| C | Taxable cost of group-term life insurance over $50,000 (also in boxes 1, 3 and 5) |
| D | Elective deferrals to a 401(k) plan |
| E | Elective deferrals to a 403(b) plan |
| F | Elective deferrals to a 408(k)(6) salary reduction SEP |
| G | Elective deferrals and employer contributions to a 457(b) plan |
| H | Elective deferrals to a 501(c)(18)(D) plan (also in box 1) |
| J | Nontaxable sick pay |
| K | 20% excise tax on excess golden parachute payments |
| L | Substantiated employee business expense reimbursements (the nontaxable part) |
| M | Uncollected Social Security or RRTA tax on group-term life insurance over $50,000, former employees |
| N | Uncollected Medicare tax on group-term life insurance over $50,000, former employees |
| P | Excludable moving expense reimbursements, Armed Forces or intelligence community only |
| Q | Nontaxable combat pay |
| R | Employer contributions to an Archer MSA |
| S | Salary reduction contributions to a SIMPLE plan |
| T | Adoption benefits, including any amount over the $17,670 exclusion |
| V | Income from exercising nonstatutory stock options (also in boxes 1, 3 and 5) |
| W | Employer contributions to a health savings account, including cafeteria plan contributions |
| Y | Deferrals under a 409A nonqualified plan (optional) |
| Z | Income under a nonqualified plan that fails 409A (also in box 1) |
| AA | Designated Roth contributions to a 401(k) plan |
| BB | Designated Roth contributions to a 403(b) plan |
| DD | Cost of employer-sponsored health coverage (not taxable) |
| EE | Designated Roth contributions to a governmental 457(b) plan |
| FF | Permitted benefits under a QSEHRA (2026 maximum $6,450, or $13,100 with family) |
| GG | Income from qualified equity grants under section 83(i) |
| HH | Aggregate deferrals under section 83(i) elections at year end |
| II | Medicaid waiver payments excluded from income |
| TA | Employer contributions to an employee's or dependent's Trump account (new for 2026) |
| TP | Total cash tips reported to the employer (new for 2026) |
| TT | Total qualified overtime compensation (new for 2026) |
The codes small employers use most are D and AA (401(k) and Roth 401(k)), S (SIMPLE IRA), W (HSA), DD (health coverage cost) and, from 2026, TT and TP. The 2026 limit on 401(k) elective deferrals and designated Roth contributions is $24,500, which the IRS's own worked example uses; if an employee goes over it, you still report the actual amount deferred with code D.
The new 2026 codes: TA, TP and TT
Three codes arrive with the 2026 Form W-2, all from Public Law 119-21.
- TT, qualified overtime. Report only the premium part of overtime the Fair Labor Standards Act requires: the "half" in time-and-a-half, not the whole overtime wage. Employees may deduct up to $12,500 a year ($25,000 married filing jointly) for tax years 2025 to 2028. The overtime is still withheld on and still subject to Social Security and Medicare.
- TP, cash tips. Report the total cash tips the employee reported to you. Employees in occupations the IRS lists as customarily tipped may deduct up to $25,000 of qualified tips. With code TP you must also enter the employee's Treasury Tipped Occupation Code in box 14b.
- TA, Trump account contributions. From July 4, 2026, an employer may contribute up to $2,500 a year to the Trump account of an employee or an employee's dependent under a section 128 contribution program. The amount is excluded from the employee's income and reported with code TA.
If you pay overtime, code TT is the one most small employers will need for 2026. Track the overtime premium separately on each pay stub from now to December, so the year's total is a sum rather than a reconstruction in January. Our posts on no tax on overtime and no tax on tips cover the deductions from the employee's side.
Which box 12 amounts are taxable?
Box 12 mixes taxable and non-taxable items, so the code tells you how the amount was treated. Some codes repeat an amount that is already in wages; others show an amount kept out of wages.
| Code | Also in box 1 wages? | Why it's on the form |
|---|---|---|
| C | Yes, and in boxes 3 and 5 | Shows the taxable cost of life insurance cover over $50,000 |
| V and Z | Yes | Shows income that came from stock options or a failed deferral plan |
| H | Yes | The employee deducts it on their own return |
| D, E, F, S, G | No, but in boxes 3 and 5 | Shows pre-tax retirement savings |
| AA, BB, EE | Yes, Roth contributions are taxed now | Shows Roth savings separately from pre-tax deferrals |
| DD | No | Information only: the IRS says reporting it doesn't make coverage taxable |
| W | No, if excludable | Shows employer contributions to the employee's HSA |
| TT and TP | Yes, the pay itself is in wages | The amount the employee may deduct on their return |
Code DD: do small employers have to report health coverage?
Not yet. Under IRS transitional relief, reporting the cost of employer-sponsored health coverage with code DD is optional for employers who filed fewer than 250 Forms W-2 for the preceding calendar year. Larger employers must report it.
If you do report it, include both the part you pay and the part the employee pays. The IRS is explicit that code DD is not taxable: reporting the cost doesn't change the exclusion for employer health coverage.
What if an employee has more than four box 12 codes?
- Fill in the first W-2 with four box 12 entries and all the usual boxes.
- Prepare a second W-2 for the same employee for the remaining codes, with no more than four on its Copy A.
- Complete boxes a to f on the second form with the same information as on the first, and show only the items that weren't on the first form. Don't report the same federal tax data on more than one Copy A.
- Count the extra W-2 when you check the e-file rule: the IRS includes it in the 10-return total.
- If you e-file by uploading a file, you can include every box 12 amount in one wage record instead.
Where PayDocs fits
The PayDocs W-2 generator lists the box 12 codes for the form year you pick, including TA, TP and TT on 2026 forms, and allows four entries per W-2, prompting a second form for more. It makes the employee copies (B, C and 2) from your figures; you preview them free and pay per document. It doesn't file Copy A or Form W-3 with the SSA.
This is general information about federal rules for employers, not tax or legal advice. State and local rules can add to it.
Questions
What does code DD mean on a W-2?
Code DD is the cost of employer-sponsored health coverage, including both the employer's and the employee's share. It is information only and not taxable. Employers that filed fewer than 250 W-2s the year before may leave it off.
What is code TT in box 12?
New for 2026, code TT is the total qualified overtime compensation: only the premium part of FLSA overtime, such as the "half" in time-and-a-half. Employees use it for the federal overtime deduction of up to $12,500.
What is code D on a W-2?
Code D shows elective deferrals to a 401(k) plan: the part of pay the employee chose to put into the plan instead of receiving it. It is kept out of box 1 wages.
How many box 12 codes can one W-2 have?
Four on Copy A, in boxes 12a to 12d. For more, issue a second W-2 for the extra codes. An electronic file uploaded to the SSA can carry every code in one record.
Is box 12 code W taxable?
Employer contributions to an HSA, including the employee's own contributions through a cafeteria plan, are generally not taxed when it is reasonable to believe they will be excludable. If not, they also go in boxes 1, 3 and 5.
Sources
- IRS: General Instructions for Forms W-2 and W-3 (2026)
- IRS: Form W-2 reporting of employer-sponsored health coverage
- IRS: About Form W-2, Wage and Tax Statement
Sources checked October 7, 2026. This article explains how pay documents work; it is not tax or legal advice.
