The overtime deduction exists for both 2025 and 2026, but the evidence you claim from changed completely between the two years. If you filed, or are filing, for both, do not carry one year’s method into the other.
2025: the transition year
Employers were not required to report qualified overtime separately in 2025. Notice 2025-62 gave employers relief from penalties for not reporting, and Notice 2025-69 told employees how to work out the amount themselves: from paystubs showing the premium, from a statement an employer chose to provide, or by the division method on stub totals. A 2025 claim built on careful paystub maths was exactly what the IRS invited.
2026: code TT controls
From tax year 2026, reporting is mandatory. Your employer reports qualified overtime compensation in Box 12 of your W-2, code TT, computed as FLSA overtime hours times one half the FLSA regular rate. The IRS position (FS-2026-13) is that this reported amount is the basis of the deduction. If it is missing or understated, the fix is a corrected W-2c from the employer; if they will not issue one, only the reported amount can be claimed. If it is overstated, you claim the lower amount actually paid. Form 4852, the usual substitute for a missing W-2, does not satisfy the rule.
What this means in January 2027
The first code TT W-2s arrive in January 2027, and the first season’s confusion will be mismatches: a code TT figure that does not match a worker’s own stub maths. The divide-by-3 check from the paystub guide is the fastest way to see whether the W-2 is plausible, and the reconciliation tool walks through each outcome, including the W-2c route.