W-2 code TT: Public-sector comp time
Short answer: Comp time earned under FLSA 7(o) is not qualified overtime when it is earned. It counts when the time is used and paid, or cashed out: hours × the 7(o) rate ÷ 3.
Example
An employee uses 12 hours of comp time paid at $33 an hour (the rate under 207(o)(3)(B)). Code TT for that payment is 12 × $33 ÷ 3 = $132. The ÷ 3 keeps only the premium part of time-and-a-half.
An employee uses 12 hours of comp time paid at $33 an hour (the rate under 207(o)(3)(B)). Code TT for that payment is 12 × $33 ÷ 3 = $132. The ÷ 3 keeps only the premium part of time-and-a-half.
The rules
- Paid when the comp time is taken and paid as wages, or cashed out on leaving, not when it is earned (FS-2026-13 Q18).
- Amount = hours × the applicable 207(o) rate ÷ 3 (FS-2026-13 Q18).
- Section 207(o) applies to state and local government only.
Work it out for your payroll
The free code TT calculator does this per workweek for one employee or a whole payroll CSV, with bonuses spread back and weeks split by pay date. It runs in your browser.
The free code TT calculator does this per workweek for one employee or a whole payroll CSV, with bonuses spread back and weeks split by pay date. It runs in your browser.
Sources
Not tax or legal advice. Facts checked 27 Oct 2026 against the IRS FAQs (FS-2026-13) and the FLSA regulations.
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Other situations
- Double time
- State daily overtime (California and others)
- Tipped employees
- Salaried non-exempt employees
- Fluctuating workweek
- Nondiscretionary bonuses
- Piece-rate and day-rate pay
- Hospitals (8/80) and police or fire (7(k))
- Exempt employees and owners
- Weeks paid in the next year
- Fixing a wrong code TT amount (W-2c)