Does state tax conformity change W-2 Box 12 Code TT reporting?

No. W-2 Box 12 Code TT and Code TP reporting, and Box 14b, are purely federal obligations. They apply in every state regardless of whether the state conforms to Public Law 119-21 deductions. State conformity only affects what employees can deduct on their state income tax return.

Which states have no individual income tax on wages for Public Law 119-21 purposes?

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Employees in these states receive the full federal deduction value. Employers still must report Code TT and Code TP on federal W-2s.

Which states have fully conformed to Public Law 119-21 tips and overtime deductions?

Arizona fully conformed when Governor Hobbs signed HB 4168 on June 13, 2026, adding Public Law 119-21 aligned subtractions for qualified tips (§224) and qualified overtime (§225), retroactive to tax years beginning after December 31, 2024. Rolling-conformity states such as Iowa, Montana, North Dakota, and Oregon generally pick up the deductions unless they specifically decouple.

Has California conformed to Public Law 119-21 overtime deduction?

No. California's Conformity Act of 2025 (SB 711) set the IRC conformity date to January 1, 2025, which excludes Public Law 119-21 (enacted July 4, 2025). California also has daily overtime under Labor Code §510 that is not FLSA-required and does not qualify as federal qualified overtime.

Why does state conformity matter for multi-state employers?

The employer's federal W-2 Code TT figure is identical in every state, but employee messaging and withholding guidance differ. Employees in conforming states may receive federal and state benefits; employees in decoupled states receive only the federal deduction. Multi-state employers need state-specific communication for each jurisdiction.

Is Colorado fully conformed to Public Law 119-21 overtime?

No. Colorado conformed to the qualified tips deduction but decoupled from qualified overtime. HB 25-1296 requires overtime excluded from federal taxable income to be added back to Colorado taxable income beginning in tax year 2026. Initiative #119 is a pending ballot measure that would reverse the decoupling.

The Conformity Map: Where the Public Law 119-21 (OBBBA) Overtime Deduction Actually Saves Your Employees Money

As of June 2026, state income tax conformity to Public Law 119-21 qualified overtime and tips varies sharply. W-2 Code TT reporting is federal everywhere — state deductions are not.

https://phoeniciantech.com/insights/conformity-map-obbba-overtime-deduction