What Employers Need to Know About the 2026 Form W-2 and W-3 Updates

The IRS has issued Rev. Proc. 2026-27, detailing updated specifications for privately printed substitute 2026 Forms W-2 and W-3.

Superseding Rev. Proc. 2025-24, the new guidance introduces structural form changes, two new Box 12 codes, and an increased wage reporting threshold. Here is what employers need to know before year-end.

The Wage Reporting Threshold Has Increased

For wages paid after December 31, 2025, the threshold for reporting compensation on Form W-2 when no federal income tax, Social Security tax, or Medicare tax is withheld has increased from $600 to $2,000. This threshold will be adjusted for inflation after 2026.

Employers with part-time, seasonal, or other lower-wage workers should review their payroll populations to understand whether this change affects their reporting obligations.

Box 14 Has Been Split Into Two Fields

The 2026 Form W-2 divides the former Box 14 into two distinct fields:

• Box 14a: Functions the same as the old Box 14 and continues to capture items such as state disability taxes, union dues, health insurance premiums, and similar employer-reported information.
• Box 14b: A new field dedicated exclusively to reporting Treasury Tipped Occupation Code(s). Employers may report up to two three-digit codes per employee, drawn from the IRS's published list of qualifying tipped occupations.

Box 14b is required whenever tips are reported in Box 12. Omitting or entering an incorrect code can prevent an employee from claiming their tip deduction.

Two New Box 12 Codes

Rev. Proc. 2026-27 introduces two new Box 12 codes tied to the "no tax on tips" and "no tax on overtime" provisions of P.L. 119-21 (the One Big Beautiful Bill Act, enacted July 4, 2025):

• Code Tp: Reports the total cash tips an employee reported to their employer during the year.
• Code Tt: Reports the qualified overtime compensation paid to an employee, specifically the premium portion of time-and-a-half pay as required under the Fair Labor Standards Act.

It is worth noting that these codes support employee deductions claimed on their individual tax returns. Tips and overtime compensation remain subject to standard payroll tax withholding.

A Few Additional Reminders

Rev. Proc. 2026-27 also reaffirms two ongoing requirements employers should keep in mind:

• No logos or advertising on substitute forms. The prohibition on including logos, slogans, or promotional materials on any copy of Form W-2 (including employee copies and their envelopes) remains in effect. Forms that include such content may be flagged as suspicious or altered.
• E-filing is required for 10 or more returns. Employers filing 10 or more information returns must do so electronically. This applies across all return types in the aggregate.
  
  

Deadline Reminder

For 2026 wages, Forms W-2 must be furnished to employees and Copy A must be filed with SSA by January 31, 2027; because January 31, 2027 falls on a weekend, the operational due date is February 1, 2027.

Stay Ahead of Year-End

The 2026 W-2 changes are meaningful and require advance preparation. Payroll systems need to be updated to capture qualified tip amounts and overtime premiums separately from regular wages throughout the year, and tipped employee populations need to be mapped to the correct occupation codes before year-end.

Getting your systems and processes aligned now is far easier than trying to make corrections after the fact.

If you have questions about how these updates affect your organization, LGT's Tax Services team is ready to help.

To learn more about LGT and how we can serve you, contact us here.