The new mega tax law will impact paychecks and taxes, with changes reflected in the new W-2 form for tax year 2026. IRS released drafts of the new W-2 and W-4 forms, with provisions like tips and overtime pay applying for 2025. Expect more paperwork and complexity, warns tax preparer Rob Burnette.

Box 14 on the new W-2 form is split into 14a and 14b post-tax bill changes. 14a remains similar to previous years for miscellaneous employer-reported items. Box 14b accounts for Treasury tipped occupation codes for those qualifying for no tax on tips, with an IRS-provided list of eligible occupations.

Three new codes in Box 12 of the W-2 form are due to the One Big Beautiful Bill Act. These include contributions to Trump accounts, tips subject to deduction, and overtime pay subject to deduction through 2028. Maximum deductions apply with phase-outs based on income levels.

The updated W-4 form for tax withholding includes new deductions like qualified tip income, overtime compensation, car-loan interest, additional amounts for seniors, and cash gifts to charities. Separate lines for itemized deductions like medical expenses and state and local taxes are now included, with new standard deduction limitations.

A new Schedule 1-A will allow employees to claim deductions related to the new W-2 codes and W-4 deductions. Tax preparer Burnette advises patience and compliance with the new rules, suggesting professional help for complex returns or the use of DIY software. Reach out for clarification or use a professional service for filing.

The changes in the 2026 W-2 and W-4 forms are designed to accommodate the new tax law, providing clarity and transparency for taxpayers. Make sure to understand the updates and seek assistance if needed to navigate the complex changes effectively.

Read more at Yahoo Finance: How no tax on tips, extra 65+ deductions and more will change 2026 W-2, W-4