The IRS has published the General Instructions for Forms W-2 and W-3 (2026), the rulebook employers follow when they prepare wage statements for the 2026 tax year. The print version of the instructions carries a date of Jan 29, 2026. Most of what changed traces back to one law: the instructions say P.L. 119-21, commonly known as the One Big Beautiful Bill Act, was enacted July 4, 2025 and contains several new items that may affect employers.

Three changes matter most to a small employer. Box 12 picks up three new codes, Box 14 has been split in two, and inflation-adjusted penalties for failure to file, failure to furnish, and intentional disregard increased for returns required to be filed after December 31, 2026. The filing date itself moved by a day.

January 31, 2027 lands on a Sunday, which pushes the deadline for both handing employees their 2026 W-2s and sending them to the Social Security Administration to Monday, February 1, as HRMorning points out. It is also the first W-2 season with mandatory separate reporting of tips and overtime. For 2025 forms, IRS transition relief let employers leave those amounts out.

The IRS states that 2026 Forms W-2 and W-3 are due to the Social Security Administration by February 1, 2027, whether filed on paper or electronically. Waiver and extension requests carry their own earlier deadlines, covered below.

What changed in the 2026 W-2 and W-3 instructions?

The "What's New" section of the 2026 instructions lists the changes an employer has to absorb before the first 2026 W-2 run:

• Wage reporting threshold increased. The IRS increased the W-2 wage reporting threshold from $600 to $2,000 for wages paid after 2025 when no federal income, Social Security, or Medicare tax was withheld. The instructions add that this threshold will be adjusted for inflation each calendar year after 2026.
• New Box 12 codes. Code TP for cash tips, code TT for qualified overtime compensation, and code TA for employer contributions to a Trump account under a section 128 program.
• Box 14 split. Box 14 has been split into box 14a and box 14b, with box 14b created to report the Treasury Tipped Occupation Code(s).
• Box 9 resized. The instructions say box 9 was reduced in size so that an additional entry can be input into box 14a.
• Penalties increased. Failure-to-file and failure-to-furnish penalties, and penalties for intentional disregard, increased because of inflation adjustments.
• State Paid Family and Medical Leave. Employers must include the employee contribution and the employer voluntary payment as wages on the Form W-2.

Two housekeeping items from the same document: the Form W-2c was released in January 2026 and carries a revision date (Rev. 1-2026) to the right of the bold W-2c, and IRS.gov posted changes to the 2026 Forms W-2, W-2AS, W-2GU, and W-2VI on August 19, 2026. That update only reformatted the IRS.gov versions to two forms per page to match the official printed forms. The IRS says it has no operational impact, no other changes were made, and forms downloaded before Aug. 4, 2026 can still be used.

What do W-2 codes TP, TT, and TA report?

Code TP: Total cash tips reported to the employer

The IRS instructions say new box 12, code TP, will be used to report the total amount of cash tips reported to the employer. The code exists because P.L. 119-21 lets certain employees and self-employed individuals deduct up to $25,000 of qualified tips on their income tax return for tax years beginning after 2024 and ending before 2029, in occupations the IRS lists as having customarily and regularly received tips on or before December 31, 2024.

The instructions define qualified tips as cash tips, which include voluntary cash or charged tips received from customers or, for employees, tips received through tip-sharing arrangements. Mandatory service charges added to the bill are not qualified tips. Code TP itself reports all cash tips reported to you; whether those tips are qualified depends on the employee's occupation code and is settled on the employee's own return. Withholding does not go away: the instructions say tips are generally subject to federal income tax withholding and both the employer and employee share of social security and Medicare tax if the tips received are $20 or more per month. In Notice 2025-69, the IRS says the tip deduction phases out for taxpayers with MAGI over $150,000 ($300,000 for joint filers).

Code TT: Total qualified overtime compensation

New box 12, code TT, reports the total amount of qualified overtime compensation. The instructions define qualified overtime as compensation that exceeds the regular rate of pay, such as the "and-a-half" portion of time-and-a-half compensation, paid to an individual as required under section 7 of the Fair Labor Standards Act (FLSA) of 1938. Only the premium portion belongs in code TT, not the full overtime check.

For tax years beginning after 2024 and ending before 2029, the instructions say P.L. 119-21 allows individuals to deduct up to $12,500 ($25,000 if married filing jointly) in qualified overtime compensation. Like the tip deduction, the IRS says the overtime deduction phases out for taxpayers with MAGI over $150,000 ($300,000 for joint filers). Overtime compensation is still generally subject to federal income tax withholding and both shares of social security and Medicare tax.

Code TA: Employer contributions to a Trump account

The instructions describe a Trump account as a new type of traditional individual retirement account that can be established for a child who has not attained age 18. The IRS says Box 12 code TA reports employer contributions made under a section 128 Trump account contribution program for an employee or an employee's dependent.

The instructions also state that, in general, the account has an annual contribution limit, including employer contributions, of $5,000, indexed for inflation after tax year 2027.

For Forms W-2AS, W-2CM, W-2GU, and W-2VI, the IRS instructions tell filers to check with the respective territory for applicability of codes TA, TP, and TT.

The IRS 2026 General Instructions for Forms W-2 and W-3 add Box 12 code TP for total cash tips reported to the employer and Box 12 code TT for total qualified overtime compensation. Confirm that your payroll software maps the correct amounts to Codes TP, TT, and TA before filing; errors discovered after filing may require Form W-2c.

How did Boxes 9 and 14 change for 2026?

The IRS says Box 14 on the 2026 Form W-2 has been split into box 14a for other information and box 14b for Treasury Tipped Occupation Code(s). The instructions say information that was reported in box 14, Other, will now be reported in box 14a, Other, and that box 9 was reduced in size so that an additional entry can be input into box 14a. The revision applies to the 2026 Forms W-2, W-2AS, W-2GU, W-2VI, and W-2c.

Employers in tipped industries have to collect specific occupation data for Box 14b. The instructions say employers must file Forms W-2 with the SSA and furnish statements to tip recipients showing cash tips received and the Treasury Tipped Occupation Code(s) of the tip recipient, so use the applicable Treasury code rather than an occupation label of your own. The codes come from the IRS List of Occupations that Receive Tips, set by final regulations (TD 10044) published in the Federal Register on April 13, 2026. The final rule identifies occupations that customarily and regularly received tips on or before December 31, 2024, defines qualified tips, and generally adopts the September 22, 2025 proposed regulations (REG-110032-25) with modifications. Only tips received in an occupation on that list can be qualified tips. If any tips were received in a nonqualifying occupation, the instructions say to enter "000" as one of the codes in box 14b.

The 2026 forms carry two other revisions:

• Paid family and medical leave. The instructions say you must include the employee contribution and the employer voluntary payment as wages on the Form W-2. Notice 2026-6 extends for an additional year the transition period in Revenue Ruling 2025-4 for states administering PFML programs and employers participating in them, with respect to the portion of medical leave benefits a state pays that is attributable to employer contributions, and it is effective for medical leave benefits paid from states to individuals during calendar year 2026. That notice does not extend relief for employer pick-up amounts, and contemplates that employers will treat contribution amounts they voluntarily pay on behalf of their employees as wages and report them on Form W-2.
• Dependent care benefits. On September 8, 2026, the IRS posted a correction to the 2026 instructions. The instructions said the exclusion is $5,000, but P.L. 119-21, section 70404, increased the maximum exclusion to $7,500 beginning in 2026, and all amounts paid or incurred, including those in excess of the $7,500 exclusion, are reported in box 10. If your payroll provider set up box 10 from the original instructions, confirm it now uses $7,500.

When are 2026 Forms W-2 due, and who must e-file?

The IRS requires employers filing at least 10 information returns in total to e-file Forms W-2, W-2AS, W-2GU, and W-2VI, but not Form W-2CM, unless the employer obtains a waiver. If you were required to e-file the original Form W-2, you must e-file any Form W-2c correcting that form.

Electronic submissions go through the Social Security Administration's Business Services Online (BSO). The instructions note that if you need to file 50 or fewer Forms W-2 or 25 or fewer Forms W-2c at a time, you can use BSO to create them online. The instructions say new and current users should allow at least 2 weeks to complete BSO registration, so register and test your login by early January.

Employers can request filing waivers and extensions through three paths:

• Waiver from e-filing. Employers required to e-file may request a waiver on Form 8508, submitted to the IRS at least 45 days before the due date of Form W-2, or 45 days before you file your first Form W-2c.
• Extension to file with the SSA. The instructions say extensions of time to file Form W-2 with the SSA are not automatic. One 30-day extension may be requested on Form 8809, and the IRS will only grant the extension in extraordinary circumstances or catastrophe. Even with a filing extension, you must still furnish Forms W-2 to your employees by February 1, 2027.
• Extension to furnish employee copies. Complete Form 15397, Application for Extension of Time to Furnish Recipient Statements, to request an extension of time for furnishing Copies 2, B, and C to your employees. These requests are not automatically granted. If approved, the extension generally runs no more than 15 days from the due date, unless a need for up to 30 days is clearly shown.

What are the penalties for 2026 W-2s?

The IRS says inflation-adjusted failure-to-file, failure-to-furnish, and intentional-disregard penalties increased for returns required to be filed after December 31, 2026. That covers the 2026 Forms W-2 due February 1, 2027. The What's New summary doesn't list the new amounts, but the Penalties section of the instructions does. For failing to file a correct Form W-2 by the due date, the penalty per form is:

• $60 if you correctly file within 30 days after the due date. Maximum $698,500 per year ($244,500 for small businesses).
• $130 if you correctly file more than 30 days after the due date but by August 1. Maximum $2,095,500 per year ($698,500 for small businesses).
• $340 if you file after August 1, don't file corrections, or don't file required Forms W-2. Maximum $4,191,500 per year ($1,397,000 for small businesses).
• At least $690 per Form W-2 for intentional disregard, with no maximum.

You count as a small business for the lower caps if your average annual gross receipts for the 3 most recent tax years are $5 million or less. Failing to furnish correct W-2s to employees triggers a separate, additional penalty with the same amounts, so a late form can be penalized twice. Each track has its own exceptions, such as reasonable cause, and the instructions also cover civil damages for fraudulent filing of Forms W-2.

One piece of relief that existed last year does not carry forward. The IRS says Notice 2025-62, published November 5, 2025, provides penalty relief under sections 6721 and 6722 for the new tip and overtime information reporting requirements, and that this relief applies only for taxable year 2025. Employers should not rely on that notice for 2026 reporting.

How should small businesses organize payroll banking before the W-2 deadline?

In December and January, reconcile payroll payments and related bank transactions against payroll registers, employee tip reports, benefit records, and the amounts your payroll system will place on each W-2.

Novo business checking has no monthly fee or minimum balance requirement, though an account that ends the day at $0 for 130 consecutive days may be closed. Novo integrates with QuickBooks Online, which has its own pricing plans, and syncs transactions automatically. Novo also integrates with Xero and FreshBooks, which sync transactions automatically as well. Automatic transaction syncing can give you a more complete record to compare with Forms 941, 943, 944, CT-1, and Schedule H during year-end reconciliation.

A few specifics that help with the new codes:

• Card tips. Novo integrates with Stripe, Square, and PayPal, and their payouts go to your Novo account, with their own fees applying. Processor payouts can help confirm that card sales reached the account, but employers should reconcile Code TP against employee tip reports and payroll records rather than treating net processor payouts as the Code TP total.
• Payroll visibility. Gusto can be connected to view upcoming payroll amounts and dates in Novo. Novo does not run payroll.
• Contribution tracking. Standard ACH transfers have no Novo fee. If you fund a contribution by standard ACH, keep the transfer record and match it to your payroll and contribution records. Novo Reserves is a budgeting feature within the Novo checking account, not a separate account, and you can create up to 20 Reserves, which is one way to set aside money for payroll taxes.

Novo does not accept cash deposits, so a business that collects cash tips needs a complementary deposit method. The alternatives are depositing a money order or cashier's check with mobile check deposit in the Novo app, transferring from another bank, or receiving payouts from a payment processor. MoneyGram money orders aren't accepted for mobile deposit. Check deposit limits are set for each account and shown under Transfer Limits in the app, where you can also request an increase for a larger deposit. Novo applications are completed online. Most are reviewed within 24 hours, while some take up to 72 hours; eligibility is subject to final Novo determination. Novo does not provide tax, legal, or financial advice, so run the reporting questions past your accountant or payroll provider.

What should small business owners do before the February 1, 2027 W-2 deadline?

Work backward from February 1, 2027. The checklist below combines requirements from the 2026 IRS instructions with recommended prep steps; review it with your payroll provider before the deadline.

2026 W-2 PREP CHECKLIST
Business: ____________________   EIN: __-_______
Prepared by: _________________   Date: _________

1. PAYROLL SYSTEM READINESS
   [ ] Box 12 code TP mapped (total cash tips reported to the employer)
   [ ] Box 12 code TT mapped (total qualified overtime compensation)
   [ ] Box 12 code TA mapped (employer contributions under a section 128
       Trump account contribution program)
   [ ] Box 14 split handled: 14a (Other) and 14b (Treasury Tipped
       Occupation Code(s))
   [ ] Box 10 reports all dependent care amounts paid or incurred; the 2026
       exclusion is $7,500

2. TIPPED EMPLOYEES
   [ ] Treasury Tipped Occupation Code(s) from the IRS final list
       (IRS.gov/TippedOccupations) collected for each tip recipient; "000"
       entered if any tips came from a nonqualifying occupation
   [ ] Code TP includes all cash tips reported to you: voluntary cash or
       charged tips from customers, plus tip-sharing amounts
   [ ] Mandatory service charges added to the bill excluded (not qualified tips)
   [ ] Confirmed the withholding treatment for tips; the IRS says tips are
       generally subject to federal income tax withholding and both shares of
       social security and Medicare tax when tips received are $20 or more
       per month
   [ ] Code TP totals reconciled to employee tip reports and payroll records

3. OVERTIME
   [ ] Only the portion exceeding the regular rate of pay (the "and-a-half"
       portion of time-and-a-half) required under FLSA section 7 is in code TT
   [ ] Confirmed the withholding treatment for overtime; the IRS says overtime
       compensation is generally subject to federal income tax withholding and
       both shares of social security and Medicare tax

4. TRUMP ACCOUNT CONTRIBUTIONS (if you have a section 128 program)
   [ ] Employer contributions tracked by employee and funding date
   [ ] Contributions tied to a single funding bank account

5. RECONCILIATION
   [ ] W-2 totals tied to Forms 941, 943, 944, CT-1, and Schedule H (Form 1040)
   [ ] Bank feed matched to every payroll debit and processor payout
   [ ] State PFML employee contributions and employer voluntary payments
       included as wages

6. FILING
   [ ] 10 or more information returns in total? E-file is required for
       Forms W-2, W-2AS, W-2GU, and W-2VI (not Form W-2CM)
   [ ] SSA Business Services Online registered and login tested by early
       January (allow at least 2 weeks for registration)
   [ ] If requesting an e-filing waiver, submit Form 8508 at least 45 days
       before the Form W-2 due date or 45 days before filing the first Form W-2c
   [ ] Form 15397 filed if you need more time to furnish Copies 2, B, and C
       (not automatic; generally 15 days at most)
   [ ] Employee copies furnished by February 1, 2027, even with a Form 8809
       filing extension
   [ ] Transmitted to SSA by February 1, 2027
   [ ] Other (describe): ______________________________________

Paste this checklist into an LLM such as ChatGPT or Claude and ask it to build the file you actually want to work in. A prompt like "Turn this W-2 prep checklist into a Google Sheet with one row per task, columns for Owner, Due Date, Status, and Notes, and conditional formatting that flags any row still marked Not Started after January 15, 2027" will give you a working tracker instead of a wall of text.

Frequently asked questions about the 2026 W-2 changes

When are 2026 Forms W-2 and W-3 due?

The IRS instructions say the due date for filing 2026 Forms W-2, W-2AS, W-2CM, W-2GU, W-2VI, W-3, and W-3SS with the SSA is February 1, 2027, whether you file using paper forms or electronically.

Does code TT include the whole overtime payment?

No. The IRS instructions describe qualified overtime as compensation that exceeds the regular rate of pay, such as the "and-a-half" portion of time-and-a-half compensation, paid as required under section 7 of the FLSA of 1938.

Do I have to file a W-2 for a part-time worker I paid $1,500 with no tax withheld?

The $2,000 threshold alone does not settle this scenario. The IRS instructions also require Form W-2 in certain cases where tax was withheld or would have been withheld, so check the full filing rules and ask a tax professional how they apply to the worker.

Who has to e-file?

The instructions say you must e-file Forms W-2, W-2AS, W-2GU, and W-2VI, but not Form W-2CM, if you are required to file at least 10 information returns. A waiver is requested on Form 8508 at least 45 days before the due date.

Sources: General Instructions for Forms W-2 and W-3 (2026), irs.gov; 2026 W-2s With Required Overtime and Tip Reporting Due Feb. 1, hrmorning.com; irs.gov; Occupations That Customarily and Regularly Received Tips; Definition of Qualified Tips (TD 10044), federalregister.gov; List of Occupations that Receive Tips, irs.gov; Changes to the 2026 Forms W-2, W-2AS, W-2GU, and W-2VI posted on IRS.gov, irs.gov; Correction to the dependent care benefits exclusion amount, irs.gov; One Big Beautiful Bill Act: Tax deductions for working Americans and seniors, irs.gov; How do I deposit money orders or cashier's checks to my account?, novo.co; What are the limits for check deposits?, novo.co.

Disclosures

Novo Platform Inc. ("Novo") is a fintech, not a bank. Banking services provided by Middlesex Federal Savings, F.A., Member FDIC. Eligibility subject to final Novo determination.

Novo Reserves is not a separate account. Novo Reserves is a budgeting feature within the Novo checking account. All funds within Reserves remain a part of the overall balance of the Novo checking account.

Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.

This page is for informational purposes only and is not intended to be relied upon as legal, financial, or accounting advice. Please consult your own professional if you have any questions.