How to Add Tipped Occupation Codes to Employees
Coming soon in payroll
Background
The One Big Beautiful Bill Act lets employees in certain tipped positions claim a tax credit on their reported tips. The IRS outlines what counts as a tip and which jobs are considered tipped occupations. For more details, check out our blog post, “ No Tax on Tips: How Payroll Is Affected,” for more information.
While 2025 W-2 reporting is a transition year, (employers/employees are to make a reasonable estimate of tipped wages), the 2026 Form W-2 will introduce a specific code (i.e., Box 12 Code TP) for tracking qualified tip income, making accurate employer reporting essential.
Starting in 2026, employers will need to include the following info on Form W-2 for tipped employees:
- The Treasury Tipped Occupation Code (TTOC)
- The total amount of reported cash tips
In Patriot, you’ll need to assign a TTOC to each employee who earns voluntary tipped wages so the correct information appears on their W-2s for tax years 2026 -2028.
Adding TTOC (Treasury Tipped Occupation Codes) to Existing Employees
- Go to Payroll > Employee List > {Employee Name} > Pay Info >
- Click the “Edit Pay Info” button
- Find the Pay Rate information for the role that receives tips.
- Check the “Receives Tips” box to indicate tips may be part of the employee compensation.
- Choose the Treasury Tipped Occupation Code (TTOC) dropdown that applies for this role, or select “None Apply.”
- Repeat for each pay rate/role as necessary.
- Click “Save Employee.”
When adding new employees, you will also have to indicate if there are tips and, if so, their Treasury Tip Occupation Code. See our help article, “How to Add a New Employee,” for more information.
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