What is the No Tax on Tips Act?

The No Tax on Tips Act (effective 2026 tax year) exempts qualifying tips from federal income tax for employees in traditionally tipped occupations such as restaurants, bars, and hospitality. Employers must track and report qualifying tips using W-2 Code TP and overtime using Code TT.

What are W-2 Code TP and Code TT?

Code TP is the new W-2 box code for tax-exempt qualifying tips under the No Tax on Tips Act. Code TT is for tax-exempt overtime pay. Employers must separately track and report these amounts on each employee W-2 for proper tax treatment.

Which tips qualify for tax exemption under the No Tax on Tips Act?

Tips qualify if the employee works in a traditionally tipped occupation (restaurants, bars, hotels, salons, etc.), earns less than $160,000 annually, and the tips are received directly from customers or through a tip pool. Service charges and auto-gratuities added by the employer generally do not qualify.

Do restaurants need special software for No Tax on Tips compliance?

While not legally required, tip tracking software like TipTrack significantly simplifies compliance. It imports data from POS systems (Toast, Square, Clover, ADP), categorizes qualifying tips and overtime per employee, and generates the W-2 supplement data your payroll provider needs at year end.

TipTrack

Features Pricing Log in Start Free

New for 2026 Tax Year

‘No Tax on Tips’
Compliance Made Simple

Track qualified tips and overtime per employee, import directly from your POS, and generate the W-2 supplement reports your payroll provider needs.

Start Free See Features

Free for up to 5 employees. No credit card required.

Works with:ToastSquareCloverADP

Three Steps to Compliance

TipTrack keeps it simple. Most restaurants are up and running within a single pay period.

Import from POS

Upload a CSV export from Toast, Square, Clover, or ADP. We map your tip and hour data automatically.

Track Tips & Overtime

TipTrack categorizes qualified tips (Code TP) and overtime pay (Code TT) per employee, per pay period.

Generate W-2 Reports

At year end, export W-2 supplement data with the correct box codes. Hand it to your payroll provider.

Built for Restaurants

Every feature is designed around how restaurants actually operate — shifts, tip pools, overtime, and seasonal staff.

Tip Tracking

Track cash tips, credit card tips, and tip pool distributions per employee per shift. Automatically flags amounts that qualify under the new law.

Overtime Tracking

Record regular and overtime hours with pay rate calculations. Code TT amounts are computed and tracked separately for W-2 reporting.

POS Import

Import shift data from Toast, Square, Clover, ADP, and other systems via CSV. Column mapping takes under a minute.

Employee Portal

Each employee gets a magic link to view their own YTD tip and overtime totals. No passwords, no app downloads.

W-2 Reports

Generate W-2 supplement reports with proper Code TP and Code TT fields. Export as PDF or CSV for your payroll provider.

Mobile Friendly

Managers can enter tips from their phone right after each shift. The entire dashboard works on any screen size.

Employee Self-Service Portal

Every team member gets a personal magic link — no passwords, no app store downloads. They can check their YTD qualified tips and overtime totals anytime, from any device.

Employees check their own totals via magic link. No app download required.

9:41 AMTipTrack•••

Welcome back,

Maria G.

YTD QUALIFIED TIPS

$4,280.00

Code TP · Tax-exempt under new law

YTD OVERTIME HOURS

68.5 hrs

Code TT · $1,712.50 overtime pay

Last updated Feb 21, 2026

Start Tracking Today

The 2026 tax year has begun. Start tracking now so you’re ready at year end — not scrambling in January.

Get Started Free