W-2 code TP and box 14b: what employers report for tips
In short
- From 2026, W-2 box 12, code TP shows the total cash tips each employee reported to you during the year.
- Box 14b holds up to two Treasury Tipped Occupation Codes for the jobs where the tips were earned, and 000 if any tips came from a job not on the list.
- Whether a tip qualifies for the employee's deduction is worked out on the employee's own return.
- 2026 W-2s are due February 1, 2027.
What goes in code TP
The 2026 W-2 instructions say to report "the total amount of cash tips reported to the employer." Tips stay subject to income tax withholding, and to Social Security and Medicare tax once an employee receives $20 or more in a month. When you report tips in code TP, you must also fill in box 14b.
What goes in box 14b
Enter up to two Treasury Tipped Occupation Codes, based on the occupations in which the employee received tips. If any of the employee's tips came from an occupation that is not on the Treasury list, one of the codes must be 000.
The list has more than 70 occupations in eight categories. Codes that come up most in restaurants, salons, spas and studios:
| Code | Occupation |
|---|---|
| 101 | Bartenders |
| 102 | Wait staff |
| 601 | Skincare specialists, including spa estheticians |
| 602 | Massage therapists |
| 603 | Barbers, hairdressers, hairstylists and cosmetologists |
| 605 | Manicurists and pedicurists |
| 606 | Eyebrow and eyelash technicians |
| 607 | Makeup artists |
| 608 | Exercise trainers and group fitness instructors, including yoga instructors and personal trainers |
Service charges are not tips
Under the Treasury rules, a tip is paid voluntarily and is not negotiated. A service charge counts only if the customer can leave it out or change it. The IRS's own example: an automatic 18% charge on large parties, paid out to staff, is not a qualified tip.
What qualifies for the employee
A qualified tip is paid in cash or an equivalent, such as a check, card or gift card, voluntarily and without negotiation. Tips shared through a tip pool can qualify. Employees can deduct only tips reported on a W-2, a Form 1099, or their own Form 4137.
The regulations also leave out tips earned while working for a specified service business, a category that includes health. Med spa groups should get advice on where they fall.
Before your W-2s go out
- Make sure every tip employees reported is in payroll, including tips paid out from card sales.
- Give each tipped job a Treasury code, and use 000 for tips earned in a job that is not on the list.
- Keep mandatory service charges out of tips.
- Check employees who earn tips in two jobs, such as an instructor who also works the front desk.
Questions about your tips reporting?
We check code TP and box 14b against your payroll, and list every employee whose tips or codes are off, before W-2s go out.
See the W-2 check