Free tool · Tax year 2026

Qualified overtime calculator for employers

Work out the overtime premium to report in W-2 box 12, code TT, for any workweek. Multiple pay rates, bonuses and shift differentials are handled, and every step is shown.

One employee, one workweek

HoursHourly rate ($)

Enter straight-time base rates only, including for weekend or holiday hours. Don't enter overtime pay, double time, or paid time off. Salaried non-exempt: use weekly salary ÷ the hours it covers. Day rate: hours at rate 0, day-rate total in the field below.

Only pay the employee was promised or expected (non-discretionary). Leave out discretionary bonuses and expense reimbursements.

Qualified overtime (code TT)
$0.00
    Doing this for a whole team, all year?

    The batch version takes a timesheet export and gives every employee's code TT total for the W-2, with the working for each week. It also totals reported tips for code TP and fills in box 14b. It runs in your browser, so payroll data never leaves your computer.

    Get the batch tool

    How the code TT amount is worked out

    For tax year 2026, employers report qualified overtime compensation in box 12 of Form W-2 with code TT. It is only the overtime premium the federal Fair Labor Standards Act (FLSA) requires: the "half" in time-and-a-half, not the full overtime paycheck (IRS FS-2026-13; W-2 instructions).

    StepCalculation
    1. Regular rateAll pay for the workweek, including non-discretionary bonuses and shift differentials, divided by hours actually worked
    2. Overtime hoursHours worked over 40 in the workweek
    3. Qualified overtime½ × regular rate × overtime hours, rounded to the cent for each workweek
    4. Box 12, code TTGenerally, the total of step 3 for every workweek paid in the calendar year

    What counts and what doesn't

    SituationCounts toward code TT?
    Hours over 40 in a workweek for a non-exempt employeeYes, the half-time premium only
    Double time or any premium above time-and-a-halfOnly the FLSA-required half-time portion
    Daily overtime under state law (for example, California over 8 hours a day) in a week under 40 hoursNo
    Overtime paid only because of a union contract or company policyNo, unless the FLSA also requires it
    Employees exempt from, or not covered by, FLSA overtime (executive, administrative, professional and others)No
    Weekend, holiday or contract premium rates (e.g. time-and-a-half for Sundays regardless of hours)Left out of the regular rate; enter those hours at the base rate
    Non-discretionary bonuses, shift differentials, piece payThey raise the regular rate, so they raise the premium
    Holiday, vacation or sick pay for time not workedLeft out of both pay and hours

    Sources: IRS FS-2026-13 and DOL Fact Sheet #56A.

    Questions employers ask

    Is the code TT amount the same as the overtime on the paycheck?

    Generally no. Code TT is only the federally required premium, the half in time-and-a-half. An employee who works 45 hours at $20 an hour earns $150 of overtime pay for the extra 5 hours, but only $50 is qualified overtime for code TT.

    Do I include California daily overtime?

    Only the part that is also federal overtime. Federal overtime starts after 40 hours in a workweek. Daily overtime in a week under 40 hours is required by state law, not the FLSA, so it is not qualified overtime.

    What if I pay double time?

    Only the federally required half-time premium counts. If an employee works 50 hours at $20 and you pay double time for the last 10, qualified overtime is still $100 (half of $20 times 10 hours), as in the IRS's own example.

    Which year does a workweek belong to?

    Generally, the year it was paid. A workweek that ends in late December but is paid in January belongs on next year's W-2. If a bonus for an earlier week is paid later (a quarterly bonus, say), the extra overtime it creates counts in the year the bonus is paid. The batch tool handles both with pay dates.

    Do bonuses change the amount?

    Non-discretionary bonuses (ones the employee was promised or expected, such as attendance or production bonuses) are part of the regular rate, so they raise the premium. A bonus that covers several weeks should be spread over the workweeks it was earned in. Discretionary bonuses are left out.

    What if a W-2 already went out with the wrong amount?

    The IRS says to issue a corrected Form W-2c to the employee and the Social Security Administration as soon as possible. Employees can only use the amount shown on a W-2 or W-2c.

    How do I enter salaried, day-rate or weekend-premium workers?

    For a salaried non-exempt employee, use an hourly rate of weekly salary divided by the hours the salary is meant to cover. For day-rate or piece-rate pay, enter the hours at a rate of 0 and put the week's total in the bonus field. Weekend, holiday or contract premium hours go in at the base rate, since those extra premiums are not part of the regular rate.

    Is there a cap on what I report?

    No. The employee's deduction is capped at $12,500 ($25,000 on a joint return) and phases out above $150,000 of modified AGI ($300,000 joint), but the employer generally reports the full qualified overtime paid, even above the cap.

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