What goes where
| W-2 box | What to report |
|---|---|
| Box 12, code TP | All cash tips the employee reported to you, including tips from jobs not on the Treasury list. "Cash" includes tips paid by card, check or app, and shares from a tip pool. |
| Box 14b | Up to two Treasury Tipped Occupation Codes for the jobs the tips came from (code lookup). If any tips came from a job not on the list, one of the two must be 000. |
Tips stay in boxes 1, 5 and 7 as before. Code TP shows the tip amount separately, so the employee can claim the deduction (IRS 2026 W-2 instructions).
Specified service businesses (health, law, accounting, consulting and similar) use code TP too. The 2026 W-2 has no separate code for them, and the IRS isn't enforcing that exclusion until it issues final rules on it.
Worked examples
| Employee | Tips reported in 2026 | Code TP | Box 14b |
|---|---|---|---|
| Server | $12,220.75 as wait staff | $12,220.75 | 102 |
| Bartender who also works as a barback | $8,125.00 bartending + $1,210.00 as a bartender helper | $9,335.00 | 101, 104 |
| Host who earned over $25,000 | $27,400.00 | $27,400.00 | 109 |
The last row reports the full $27,400. The $25,000 cap and the income phase-out (above $150,000 of modified AGI, $300,000 joint) are applied by the employee on their return, not by the employer.
What to leave out of code TP
- Mandatory service charges and automatic gratuities. They're wages, not tips, even when they're passed on to staff.
- Non-cash tips, such as tickets, goods, services or digital assets like crypto.
- Tips the employee didn't report to you. Code TP shows tips reported to the employer.
The final rules add more conditions for the employee's deduction. If the payment screen has no zero-tip option, only the amount above the required minimum counts. Tips received by managers or supervisors through tip-sharing aren't qualified tips. Payments from the employer itself, or from a business the worker owns 5% or more of, are treated as disguised wages. If your setup has any of these, check with your payroll provider how to report them.
Deadlines
2026 Forms W-2 are due to employees and the Social Security Administration by February 1, 2027, since January 31 falls on a Sunday. The 2025 penalty relief for the new tip and overtime reporting doesn't extend to 2026.
The batch version totals each employee's reported tips for code TP, picks their box 14b codes, and works out code TT overtime from the same timesheet.
Questions
Do I report all tips in code TP or only qualified tips?
Report all the cash and charged tips the employee reported to you, including tips from jobs not on the Treasury list, leaving out service charges, automatic gratuities and non-cash tips. Whether the tips qualify for the deduction depends on the occupation codes in box 14b and on rules the employee applies on their return.
Is there a separate code for specified service businesses?
No. The final 2026 Form W-2 has no separate code for them, so tips in those businesses also go in code TP. The IRS isn't enforcing the specified service business exclusion until it issues final rules on it.
Do I apply the $25,000 cap?
No. Report the full amount. The employee applies the $25,000 cap and the income phase-out on their own return.