SCorpDesk / 2026 S-Corp & QBI Guides / Do S-Corp Owners Qualify for the 2026 No Tax on Overtime (W-2 Code TT) or Tips Deduction?
Do S-Corp Owners Qualify for the 2026 No Tax on Overtime (W-2 Code TT) or Tips Deduction?
Can a 2% S-Corporation shareholder-employee claim the 2026 No Tax on Overtime (Code TT) deduction?
Generally no for Officer salary: bona fide corporate officers are exempt Executive/Administrative employees under FLSA Section 13(a)(1) (29 CFR Part 541) and therefore do not earn FLSA-mandated overtime eligible for W-2 Code TT. Instead, S-Corp owners shield income via FICA-exempt K-1 distributions, the 20% Permanent Section 199A QBI deduction, and IRC Section 62(c) Accountable Plans.
Generally no for Officer salary: bona fide corporate officers are exempt Executive/Administrative employees under FLSA Section 13(a)(1) (29 CFR Part 541) and therefore do not earn FLSA-mandated overtime eligible for W-2 Code TT. Instead, S-Corp owners shield income via FICA-exempt K-1 distributions, the 20% Permanent Section 199A QBI deduction, and IRC Section 62(c) Accountable Plans.
Frequently Asked Questions
Can a 2% S-Corporation shareholder-employee claim the 2026 No Tax on Overtime (Code TT) deduction?
Generally no for Officer salary: bona fide corporate officers are exempt Executive/Administrative employees under FLSA Section 13(a)(1) (29 CFR Part 541) and therefore do not earn FLSA-mandated overtime eligible for W-2 Code TT. Instead, S-Corp owners shield income via FICA-exempt K-1 distributions, the 20% Permanent Section 199A QBI deduction, and IRC Section 62(c) Accountable Plans.