2026 Form W-4 adds deductions for qualified tips and overtime (Step 4(b))
- Jurisdiction
- Federal (US)
- Topic
- Payroll & tax
- Effective date
- 2026-01-01
- Who it covers
- All employers that withhold federal income tax
- Status
- Verified against an official source
The law, summarized
- The 2026 Form W-4 Step 4(b) worksheet lets employees estimate deductions for qualified tips (up to $25,000) and qualified overtime (up to $12,500, or $25,000 married filing jointly), subject to income limits.
- Employers must use an employee's updated W-4 if submitted, and Publication 15-T withholding methods.
- Tips and overtime remain subject to Social Security and Medicare tax.
StateHR Take · AI-generated analysis, not legal advice
Who should act: All employers that withhold federal income tax with workers in Federal. Confirm your payroll system and W-4/W-2 processes handle this change now (in effect since 2026-01-01). Confirm the details in the official source before acting.
Generated 2026-10-15T18:41-05:00
Official sources
- www.irs.govhttps://www.irs.gov/pub/irs-pdf/fw4.pdf
- www.irs.govhttps://www.irs.gov/publications/p15t
