The IRS did not update official W-2 forms for the 2025 tax year (forms you receive in January 2026) to include a specific box for this new deduction.
- For Tax Year 2025: Employers have transition relief and are not required to separately report the exact qualified overtime amount on the W-2.
- Employers may voluntarily report the amount in Box 14 or on a separate statement.
- If your employer does not provide a separate accounting, you must use your pay stubs or earning statements to calculate the qualified overtime amount using a reasonable method, following IRS guidance.
- Examples of Deduction ~ Time and half pay / 3 equals deduction. Double pay for overtime / 4 equals deduction.
- For Tax Year 2026 and Beyond: The IRS has released a draft revised W-2 form, and employers will be required to report qualified overtime compensation in Box 12 using a new code, likely “TT”.
You will claim the deduction by completing a new Schedule 1A and entering the total on Form 1040 line 13b when you file your 2025 tax return in early 2026.