W-2 Box 12 Codes Explained: 2026 Guide for Employers

Form W-2, officially called the Wage and Tax Statement, summarizes an employee’s wages, tax withholdings, and Social Security and Medicare taxes for the year. Along with that, the form also captures certain benefits, contributions, and other payroll amounts through the codes reported in Box 12. These codes help employees understand amounts reported by their employers and file their tax returns correctly. For 2026, there are now three new Box 12 codes – TA, TP, and TT.

This guide breaks down the W-2 Box 12 codes and explains what employers need to know for 2026.

What Is Box 12 on Form W-2?

Form W-2 Box 12 reports specific amounts that require an IRS-designated code, including retirement plan contributions, certain benefits, taxes that could not be collected, and other compensation. Employers enter the applicable code followed by the corresponding amount.

Do note that boxes 12a through 12d are reporting spaces, not separate code categories. The IRS code determines what the amount represents. For example, an employer could report a 401(k) deferral as D 5,300.00 in Box 12a and employer-sponsored health coverage as DD 12,000.00 in Box 12b. If more than four coded amounts must be reported, additional Forms W-2 may be required for paper filing.

What’s New in Box 12 for 2026?

The 2026 W-2 codes include the following three additions introduced under Public Law 119-21.

Code TA – Trump Account Contributions

Starting July 4, 2026, an employer can put up to $2,500 a year into a Trump account for an employee or an employee’s dependent through a section 128 Trump account contribution program. These employer contributions are excluded from the employee’s gross income and are reported using Code TA.

Code TP – Cash Tips

Report total cash tips reported to the employer using Code TP. When Code TP is used, the employer must also report the applicable Treasury Tipped Occupation Code(s) in Box 14b.

Code TT – Qualified Overtime Compensation

Code TT reports the amount of qualified overtime compensation paid during 2026. For overtime paid at time-and-a-half, only the amount above the employee’s regular rate the additional half portion is reported under Code TT, not the employee’s full overtime payment.

Complete W-2 Box 12 Code List for 2026

The table below summarizes the 2026 IRS codes and what employers report under each one.

Most Common Box 12 Codes Employers Actually Use

Code D: Captures elective deferrals under a section 401(k) cash or deferred arrangement, including a SIMPLE 401(k) arrangement.

Code AA: Handles designated Roth 401(k) contributions. Unlike traditional 401(k) deferrals reported with Code D, designated Roth contributions are included in the employee’s taxable wages.

Code E: Applies to employee contributions to a 403(b) retirement plan made by choosing to defer part of their pay.

Code S: Covers salary reduction contributions to a section 408(p) SIMPLE IRA, including Roth SIMPLE IRA contributions. Do not use Code S for a SIMPLE 401(k); use Code D instead.

Code W: Reports employer contributions to an employee’s Health Savings Account (HSA), including qualifying employee contributions made through a section 125 cafeteria plan.

Code DD: Shows the cost of employer-sponsored health coverage. This amount in W-2 Box 12 Code DD is not taxable income to the employee.

Code C: Represents the taxable cost of group-term life insurance coverage over $50,000.

How to Enter Box 12 Codes Correctly

• Enter the applicable IRS-designated code in capital letters
• Report the dollar amount associated with that code immediately after the code
• Use decimal points for the amount, but do not include dollar signs or commas
• For example, $5,300 in 401(k) elective deferrals should be reported as D 5300.00
• Treat Boxes 12a, 12b, 12c, and 12d as four available entry lines for any valid Box 12 code and amount—not as fixed categories for specific codes. That means that Code D does not have to go in 12a, Code DD does not have to go in 12b, etc. Any valid Box 12 code can appear in any of the four Box 12 spaces, as long as the code and amount are reported correctly.
• On Copy A, use one Form W-2 for up to four Box 12 entries. If you file on paper and need to report more, add another Form W-2. If you file electronically, all Box 12 amounts can go in the employee’s wage record.

Box 12 Errors Employers Should Avoid

Employers should review payroll records and Box 12 entries carefully before filing Forms W-2. Common mistakes include:

• Using Code S for a SIMPLE 401(k) – Code S is for salary reduction contributions to a SIMPLE IRA under section 408(p). A SIMPLE 401(k) uses Code D.
• Reporting employer matching contributions as employee deferrals – Employer matching contributions generally should not be reported as employee elective deferrals under a Box 12 retirement code unless the IRS instructions specifically require it.
• Treating 12a, 12b, 12c, and 12d as separate codes – These are simply spaces for reporting multiple Box 12 entries. The IRS-designated letter code determines what the amount represents.
• Using an outdated code list – Employers should use the 2026 Form W-2 instructions rather than relying on a prior-year list.
• Using traditional retirement codes for Roth contributions – Designated Roth contributions have their own Box 12 codes. Use Code AA for a designated Roth 401(k) contribution, Code BB for a designated Roth 403(b) contribution, and Code EE for a designated Roth contribution under a governmental section 457(b) plan.
• Using the wrong code for a retirement plan – The amount reported may be correct, but entering it under the wrong code can still result in an inaccurate Form W-2.
• Failing to correct a reporting error – When a Box 12 entry is incorrect, and a correction is required, employers should follow the IRS rules for issuing Form W-2c.

FAQs

1. What does Code D mean in Box 12 of Form W-2?

Code D reports elective deferrals under a 401(k) plan, including SIMPLE 401(k)s.

2. What does Code DD mean on Form W-2?

Code DD shows the total cost of the employee’s employer-sponsored health coverage. It’s informational, as employers show employees the value of their health benefits, but the amount isn’t taxable income.

3. Can an employee have multiple Box 12 codes?

Yes. An employee can have several reportable benefits or contributions during the year. On Copy A, only four Box 12 entries can be made on one Form W-2. For paper filing, extra entries require another Form W-2. However, for electronic filing, they can be included in the employee’s wage record.

4. Are Roth 401(k) contributions reported under Code D?

No. Designated Roth 401(k) contributions use Code AA. Code D reports elective deferrals under a section 401(k) arrangement, including SIMPLE 401(k) arrangements.

5. What are the new Box 12 codes for 2026?

The IRS added Code TA for Trump account contributions, Code TP for cash tips reported to employers, and Code TT for qualified overtime compensation.