2026 W-2s must show technicians' overtime separately for the first time, and Georgia still taxes it. What field service employers should check before year-end.
Alpharetta, GA (PRUnderground) October 20th, 2026
Heating and air, plumbing, electrical and other field service companies in Georgia must report their technicians' overtime pay in a new way this winter, as the first W-2 forms under the federal "no tax on overtime" deduction come due.
For tax year 2026, employers must report each employee's qualified overtime compensation in Box 12 of Form W-2 using the new code TT, according to IRS Fact Sheet FS-2026-13, updated in August. The IRS gave employers relief from the requirement for 2025 and said no relief is available for later years. Because Jan. 31, 2027 falls on a Sunday, employers have until Monday, Feb. 1, to furnish the forms.
The amount reported is narrower than many workers expect. Only overtime required by the Fair Labor Standards Act counts, and only the premium portion, generally the extra half of "time and a half" for hours over 40 in a workweek. Overtime a company pays voluntarily, such as a premium for Saturday work in a week under 40 hours, does not qualify. Employees can deduct up to $12,500 a year, or $25,000 on a joint return, with the deduction phasing out above $150,000 of modified adjusted gross income, or $300,000 for joint filers. The deduction runs through tax year 2028.
Georgia did not follow the federal change. The state's 2026 conformity law, House Bill 1199, signed March 20, leaves overtime and tips taxable for Georgia income tax purposes.
Field service businesses are among those most affected. Technicians in trades such as HVAC and plumbing often work long weeks during summer and winter peaks, and many are paid commissions or performance bonuses, which the FLSA generally counts when calculating the regular rate used to figure overtime.
"Most owners hear 'no tax on overtime' and assume it's something their employees handle at tax time," said Christy Krzyzaniak, founder of ClearLedgers, an Alpharetta bookkeeping and payroll firm that works with home and field service companies. "The work lands on payroll. If your system can't separate the overtime premium for every technician, December is the time to find out, not the last week of January."
The IRS also notes that qualified overtime remains subject to federal income tax withholding. Employers cannot reduce withholding unless an employee submits a new Form W-4, and errors on the code TT amount must be corrected with Form W-2c and may carry information-reporting penalties.
Krzyzaniak said employers should also prepare technicians for the state side. "Techs who hear about the deduction may expect a bigger refund than they get," she said. "Telling your team ahead of time that Georgia still taxes overtime saves a hard conversation in March."
ClearLedgers, which provides full-service payroll for small businesses, recommends that field service owners confirm three things with their payroll provider before year-end: that overtime is tracked by workweek for each employee, that commissions and bonuses are included in the regular rate, and that the provider will populate Box 12 code TT on 2026 W-2s. Employers with questions about their own situation should also consult their CPA.
About ClearLedgers
ClearLedgers LLC is a bookkeeping and payroll firm based in Alpharetta, Georgia, serving small businesses in Georgia, South Carolina and across the United States, including home and field service companies. Founder Christy Krzyzaniak is a Certified Bookkeeper through the American Institute of Professional Bookkeepers and a QuickBooks ProAdvisor with more than 25 years of experience in accounting, operations and human resources. The firm was named to Best of Gwinnett in 2024 and 2025. More information is available at clearledgersllc.com.
