Starting with 2026 W-2s, any employee who earns tips needs a Treasury Tipped Occupation Code (TTOC) on their W-2. This article explains what TTOCs are and who needs one.
Why it's needed
Under the One Big Beautiful Bill Act (OBBBA), employees can claim a qualified tips deduction of up to $25,000. To claim it, their W-2 must show a TTOC in Box 14b that describes the tipped occupation they work in (for example, 102 for wait staff or 603 for hairstylists).
If a tipped employee has no TTOC when their W-2 is generated, Box 14b shows 000. That tells the IRS their tips don't qualify, and the employee can't claim the deduction unless the employer issues a corrected W-2 (W-2c).
Updating employee profiles with TTOCs before W-2s are generated means the W-2 is right the first time.
Who needs a TTOC
Employees who earned tips in 2026. That means anyone with Cash tips or Paycheck tips earnings. This includes terminated employees, because they still receive a 2026 W-2.
Employees without tips don't need their TTOC set. Their TTOC fields can stay at the default, not_applicable.
For an employee who earns tips, a Primary TTOC that is empty or set to not_applicable counts as missing.
Situation | What to do |
No tips in 2026 | Nothing. |
Tips, Primary TTOC empty or | Needs a code. |
Tips, valid 3-digit code (including 000 where correct) | Nothing. |
Employees with more than one tipped role
The W-2 has room for two codes. Salaris fills these with Primary and Secondary TTOCs. Set Primary to the occupation where the employee earned the most tips, and Secondary to a second tipped occupation if they have one. If any tips came from an occupation not on the IRS list, 000 must be one of the two codes.
What to do
Find every employee with 2026 tip earnings.
To do this: Navigate to Reports and run the Payroll Summary report for 2026. Any employee with
Cash tipsorPaycheck tipsearnings will need a TTOC.Map each employee to a Primary TTOC (and Secondary TTOC, if applicable). Use position names, job titles or SOC codes to help work out the correct code to map to.
To do this: Navigate to Employees > (Active/Inactive) > Profile and click on Edit next to Treasury Tipped Occupation Codes (TTOC).
Keep it current by assigning a TTOC whenever someone is hired into or moved to a tipped role.
For new employees, this can be added in the Add Employee workflow.
Re-check before the final payroll of each year to catch employees who start earning tips later.
A TTOC describes what the employee does, so Salaris can't assign it for you. It has to come from the employer.
Key dates
November 2nd 2026: TTOCs are available in Salaris
Before December 31st (each year): Every tipped employee should have the correct TTOC saved.
FAQ
Will a missing TTOC block payroll? No. But a warning will appear against the employee profile if they earn tips and no TTOC is set after December 10.
Can a TTOC be changed after it's set? Yes. If it changes after the W-2 is published, a W-2c is generated.
Will every employee be flagged on December 10? No. Only employees with 2026 tips and a missing Primary TTOC.