Do 2025 W-2s have to show qualified overtime?

No. The IRS gave penalty relief for 2025, so employees may need pay stubs or an employer statement instead.

Payroll and information returns · 2026

Tips and overtime reporting: what employers must track for 2026

For 2025 the IRS let employers and payers skip separate reporting of tips, tipped occupations and qualified overtime. That relief covered 2025 only, so your employer clients need the data split out for every 2026 pay period.

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Payroll and information returns · 2026

Penalty relief covered

2025 only

Track separately: Tips, occupation, overtime premium
Forms updated: 1099-NEC, 1099-MISC, 1099-K
Affects: 2026 W-2s and 1099s

Applies: Pay periods in 2026 onwardFrom IRS.gov · checked October 10, 2026

What changed

Employees and workers can now deduct qualified tips and the overtime premium, so the IRS needs payers to report those amounts. Publication 1099 for 2026 says Forms 1099-NEC, 1099-MISC and 1099-K were updated to report cash tips along with the Treasury tipped occupation code.

For 2025 the IRS waived penalties for not reporting these items separately, because the forms had not changed in time. That relief does not carry into 2026.

A checklist for employer clients

Map each tipped role to a Treasury tipped occupation code.
Make sure payroll splits the overtime premium from regular pay.
Confirm the payroll provider’s 2026 W-2 and 1099 formats carry the new fields.
Tell employees that their year-end forms will show these amounts from 2026.

FAQ

Frequently asked questions

Do 2025 W-2s have to show qualified overtime?: No. The IRS gave penalty relief for 2025, so employees may need pay stubs or an employer statement instead.

Keep exploring

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The plain-English summary for business owners

The qualified overtime deduction: only the premium counts

Schedule 1-A · qualified overtime

The no tax on tips deduction, for tax preparers

Schedule 1-A · qualified tips

The 1099 threshold moves to $2,000: what changes in January 2027

Information returns · payments from 2026

Sources

General information for tax professionals, not advice on a specific return. Figures are from IRS.gov on the date shown; check the current IRS instructions before filing.

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