IRS Mandates W-2 Reporting for Overtime Deduction to Fix 2025 Confusion
The IRS has updated guidance requiring employers to report qualified overtime pay on 2026 W-2s using code 'TT,' eliminating the need for workers to manually calculate deductions. This change follows a chaotic 2025 filing season where over 29 million taxpayers claimed the break, with an average deduction exceeding $3,100. While the deduction remains capped at $12,500 for singles and $25,000 for joint filers, experts advise verifying the reported figures against pay stubs to ensure accuracy.