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Overtime Tax Deduction Clarified for 2026 | Durham News
Overtime tax confusion is over — starting in 2026, employers must report your correct overtime premium deduction on your W-2 using Box 12, Code TT. This new IRS rule, tied to the One Big Beautiful Bill Act, only applies to the extra pay above your regular hourly wage — not union or state-mandated overtime. Last year’s estimates were rough, but now penalties apply if employers get it wrong. Your deduction can exceed annual caps, and you’ll need a corrected W-2 if the number’s off. Adjust withholding with a new W-4, or wait for a refund — this benefit hits hourly workers in healthcare…
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