2026 year end payroll form changes

Major changes for 2026 year end payroll form changes include:

Form 1099-NEC (nonemployee compensation) is now a 2-up form (two payees per sheet).  Form 1099-MISC remains a 2-up form.

Forms 1099-MISC and 1099-NEC now include boxes to report cash tips, TTOC (Treasury Tipped Occupations Code), and overtime compensation.

Form W-2 introduces three new codes relating to special compensation for use in Box 12:  TA (employer contributions to a "Trump" account, TP (total amount of cash tips), and TT (total qualified overtime).  Box 14 now has two parts:  14a for "other" informational items as in the prior years and 14b for TTOC codes (provides space for two codes). To provide space for 14b, Box 14a is now smaller.   Box 14 on other related forms (for example form W-2c) has similarly been redesigned.

Additional discussion:

TTOC (Treasury Tipped Occupations Code): these codes comprise three numeric digits ranging from 101 to 810 (plus 000 can be used for non-qualifying roles).   More information.  Full list.

Code TP (box 14) vs. allocated tips (box 8):  tips reported in box 14 with code TP are tips reported by employees including credit/debit card tips and tips received through tip-sharing or tip-pooling arrangements.  This then factors into the calculation for the employee's federal income tax deduction for qualified tips (capped at $25,000).  Box 8 tips on the other hand are amounts assigned or allocated by employers (often in large food or beverage business) when total report tips by all staff fall below a certain percentage.  These tips are not included in W-2 form boxes 1, 3, 5 or 7 (see the special instructions that apply).

Trump accounts:  there is a fair amount of confusion surrounding these accounts.  If provided as an employee benefit (a written plan document is required), employers can contribute up to $2,500 per employee (regardless of how many qualifying dependents that employee has) per year.  Similar to other retirement plan contributions, amounts contributed are only exempt from federal income taxes, so while not reported as Box 1 wages on Form W-2, they are subject to social security and medicare wage withholding and employer matches.  They are also subject to FUTA and RRTA taxes (and are generally subject to state unemployment tax, although that could vary from state to state).  Contributions can be made via an established Section 125 Cafeteria Plan if amended to allow such contributions.  Employers could decide to make $1,000 contributions to match the federal government "seed" amounts (available only for children born in the U.S. between January 1, 2025 and December 31, 2028) and allow employees to contribute the rest.  They are capped at $5,000 (which will be indexed from year to year) per year per eligible dependent (age 0 to 18).  There are restrictions as to where the funds can be invested so care should taken in determining what investment options are available before opening this type of account.  Parents or guardians act as custodians and withdrawals are locked until the child beneficiary reaches 18.  At age 18, the account transitions into a standard IRA.