Schedule1ADesk / 2026 Tax & Payroll Guides / 2026 Bonus Tax Calculator: 22% Supplemental Withholding & FLSA W-2 Code TT True-Up
2026 Bonus Tax Calculator: 22% Supplemental Withholding & FLSA W-2 Code TT True-Up
How are bonuses taxed in 2026 and when does a bonus increase your W-2 Box 12 Code TT overtime deduction?
In 2026, the IRS requires a flat 22% federal supplemental withholding rate on bonuses up to $1,000,000 (and 37% above $1,000,000) under Treas. Reg.
31.3402(g)-1, plus 7.65% FICA and state supplemental tax. Crucially, if you are an hourly non-exempt employee who receives a non-discretionary production, attendance, or KPI bonus during a period with overtime hours, 29 CFR 778.209 requires an FLSA overtime true-up (0.5x), and that bonus overtime true-up is deductible in W-2 Box 12 Code TT on 2026 IRS Schedule 1-A.
In 2026, the IRS requires a flat 22% federal supplemental withholding rate on bonuses up to $1,000,000 (and 37% above $1,000,000) under Treas. Reg.
31.3402(g)-1, plus 7.65% FICA and state supplemental tax. Crucially, if you are an hourly non-exempt employee who receives a non-discretionary production, attendance, or KPI bonus during a period with overtime hours, 29 CFR 778.209 requires an FLSA overtime true-up (0.5x), and that bonus overtime true-up is deductible in W-2 Box 12 Code TT on 2026 IRS Schedule 1-A.
Open Interactive 2026 Schedule 1-A & W-2 Box 12 Calculator
2026 Form W-2 Box 12 & Schedule 1-A Reference Table
| W-2 Box / IRS Schedule | 2026 Reporting & Deduction Rule |
|---|---|
| Box 12 Code TT (New for 2026) | Qualified FLSA 0.5x Overtime Premium · Deduct up to $12,500 Single / $25,000 MFJ on Schedule 1-A Part III |
| Box 12 Code TP + Box 14b TTOC (New for 2026) | Qualified Voluntary Tips in 75 TTOC Occupations · Deduct up to $25,000 on Schedule 1-A Part II |
| Box 12 Code D / S / E / G | Pre-tax 401(k), SIMPLE IRA, 403(b), and 457(b) deferrals · Lowers MAGI to prevent Schedule 1-A phase-out |
| Box 12 Code W | Employer + Employee pre-tax HSA contributions · Excluded from Box 1 wages and lowers MAGI |
| Box 12 Code DD | Informational cost of employer-sponsored health coverage · Non-taxable |
| Form 1098-VLI (Schedule 1-A Part IV) | Up to $10,000 deduction for interest on new U.S.-assembled passenger vehicles (VIN starts with 1, 4, 5, or 7) |
| Schedule 1-A Part V (Age 65+ Bonus) | $6,000 per spouse age 65+ ($12,000 joint) · Phases out above $75,000 Single / $150,000 MFJ |
Frequently Asked Questions
How are bonuses taxed in 2026 and when does a bonus increase your W-2 Box 12 Code TT overtime deduction?
In 2026, the IRS requires a flat 22% federal supplemental withholding rate on bonuses up to $1,000,000 (and 37% above $1,000,000) under Treas. Reg.
31.3402(g)-1, plus 7.65% FICA and state supplemental tax. Crucially, if you are an hourly non-exempt employee who receives a non-discretionary production, attendance, or KPI bonus during a period with overtime hours, 29 CFR 778.209 requires an FLSA overtime true-up (0.5x), and that bonus overtime true-up is deductible in W-2 Box 12 Code TT on 2026 IRS Schedule 1-A.
Do I have to itemize deductions to claim W-2 Box 12 Code TT or Code TP?
No. All four deductions on 2026 IRS Schedule 1-A (Qualified Tips, Qualified Overtime, Auto Loan Interest, and the $6,000 Senior Deduction) are above-the-line deductions available to both Standard Deduction and Itemized filers.