What Do W-2 Box 12 Codes Mean? Deferrals, Health, and Equity

The codes in Box 12 of your W-2 are shorthand for specific kinds of pay, benefits, and taxes that don’t belong in the main wage boxes. Each W-2 Box 12 entry pairs a letter code with a dollar amount, and the letter is what tells you whether the amount is already in your taxable wages, excluded from them, waiting for you to pay tax on it, or just reported for the IRS’s records. Reading the codes correctly is the difference between filing an accurate return and getting a notice months later.

How Box 12 Is Laid Out

Box 12 has four slots labeled 12a, 12b, 12c, and 12d. Each slot holds one code and its amount. If your employer needs to report more than four items, you’ll get a second W-2 with the same name and employer information and the extra codes filled in.¹ That second form is not a duplicate.

An amount in Box 12 does not automatically mean you owe tax on it. Some codes identify money already included in your Box 1 wages. Others identify money specifically excluded from Box 1. A few exist only so the IRS can track totals. The code itself tells you which bucket applies.

Retirement Plan Deferrals (D, E, F, G, H, S)

These are the codes most employees encounter. They track pay that was redirected into a retirement account before income tax was calculated, which both confirms you stayed within the annual IRS limit and explains why Box 1 is lower than your gross pay.

Code D — Pre-tax 401(k) salary deferrals. Excluded from Box 1, but still subject to Social Security and Medicare taxes in Boxes 3 and 5. The 2026 elective deferral limit is $24,500. If you’re 50 or older, you can add an $8,000 catch-up, and employees aged 60 through 63 qualify for a higher catch-up of $11,250 under SECURE 2.0.²
Code E — Pre-tax 403(b) deferrals, common for public school employees and certain nonprofits. Same 2026 limits as Code D.³
Code F — Salary reduction contributions to a SARSEP. These plans are closed to new employers but existing ones still operate. Excluded from Box 1.¹
Code G — Elective deferrals and employer contributions to a governmental or nongovernmental 457(b) plan, used mostly by state and local governments. Excluded from Box 1. The 2026 limit is $24,500.¹
Code H — Deferrals into a 501(c)(18)(D) trust. Unlike the other retirement codes, this amount is included in Box 1; you claim it as a deduction on your return instead.⁴
Code S — SIMPLE IRA salary reduction contributions. The 2026 limit is $17,000, with a $4,000 catch-up at 50 and $5,250 for ages 60–63.⁵

If you worked for more than one employer during the year, your combined deferrals across Codes D, E, F, G, and S still cannot exceed the annual limit. Tracking that total is your job, not either employer’s.²

Roth Retirement Contributions (AA, BB, EE)

Roth contributions go into your account with after-tax dollars, so the amounts are already in your Box 1 wages. They appear in Box 12 so the IRS can track the basis for future tax-free distributions.

Code AA — Designated Roth contributions to a 401(k) plan.⁴
Code BB — Designated Roth contributions to a 403(b) plan.¹
Code EE — Designated Roth contributions to a governmental 457(b) plan. Nongovernmental 457(b) plans cannot offer a Roth option.⁴

Starting in 2026, employees who earned $150,000 or more in FICA wages during the prior year must make any catch-up contributions on a Roth basis. If that applies to you, your catch-up amount will show up under AA, BB, or EE rather than under D, E, or G.

Health Account and Insurance Codes

Several codes report employer-provided health benefits. Some require follow-up on your return; others are purely informational.

Code W — Health Savings Account Contributions

Code W reports every dollar contributed to your HSA for the year, including your employer’s direct contributions and any salary you redirected through a cafeteria plan.¹ These amounts are excluded from income and generally escape Social Security and Medicare taxes as well. The 2026 limit is $4,400 for self-only coverage and $8,750 for family coverage, with a $1,000 catch-up at age 55.⁶

If you see Code W, you must file Form 8889 with your return. Skipping that form is a common mistake and can produce an IRS notice even though the HSA money isn’t taxable.

Code DD — Cost of Employer-Sponsored Health Coverage

Code DD is informational only. It shows the total cost of your employer’s health plan, both your share and your employer’s share, and does not get entered anywhere on your return.⁷ It does not increase your taxable income.

Code FF — Health Reimbursement Arrangement

The amount your employer contributed to an HRA on your behalf. Like Code DD, this is informational and not taxable.¹

Code R — Archer MSA Contributions

Employer contributions to an Archer Medical Savings Account, the predecessor to the HSA. These accounts are largely phased out, but if you have one, the amount is reported on Form 8853.¹

Group-Term Life Insurance (C, M, N)

Employer-provided group-term life coverage can produce up to three codes. The first $50,000 of coverage is tax-free; coverage above that creates imputed taxable income.

Code C — Taxable cost of group-term life insurance above $50,000. Already included in Boxes 1, 3, and 5.⁸
Code M — Uncollected Social Security tax on that excess coverage, reported for former employees whose old employer couldn’t withhold it. You owe this when you file.¹
Code N — Uncollected Medicare tax on the same excess coverage. Both M and N get reported on Schedule 2 of Form 1040.⁸

Uncollected Taxes on Tips (A, B)

If your regular pay wasn’t enough for your employer to withhold all the Social Security and Medicare taxes you owed on your tips, the shortfall shows up here.

Code A — Uncollected Social Security or RRTA tax on tips. Not included in Box 4; you pay it on your return.¹
Code B — Uncollected Medicare tax on tips. Not included in Box 6.¹

Both go on Schedule 2. If you see A or B, your actual tax bill will exceed what Box 1 alone would suggest.

Nonqualified Deferred Compensation (Y, Z)

Code Y — Deferrals under a nonqualified deferred compensation plan. The timing of when this income becomes taxable depends on the plan’s structure.¹
Code Z — Income from a nonqualified deferred compensation plan that became taxable this year, usually because the deferred compensation vested or was distributed. Included in Box 1.¹

Stock and Equity Compensation (V, GG)

Code V — The spread between the exercise price and market value when you exercised a nonstatutory stock option. Already included in Boxes 1, 3, and 5. Incentive stock options are not reported here.¹
Code GG — Income from a qualified equity grant under Section 83(i). If you work for a privately held company and elected to defer income on qualified stock, Code GG reports the amount recognized when the deferral period ends, whether that’s the five-year mark, the stock going public, or your departure.⁹

Other Reporting Codes

Code J — Nontaxable sick pay from a third-party insurer in a plan you contributed to personally. Excluded from Boxes 1, 3, and 5.¹
Code K — 20% excise tax on excess golden parachute payments. Rare outside major corporate transactions.¹
Code L — Substantiated employee business expense reimbursements paid under an accountable plan. Not included in Box 1.
Code P — Excludable moving expense reimbursements for active-duty military and certain intelligence community members relocating for a permanent change of station. Not included in Box 1.¹
Code Q — Nontaxable combat pay. Excluded from earned income by default, but you may elect to include it when figuring the Earned Income Tax Credit if that produces a larger credit. It’s all or none for that election.¹
Code T — Employer-paid or reimbursed qualified adoption expenses. File Form 8839 with your return to claim the exclusion.¹⁰

What to Do If Your Deferrals Exceeded the Limit

Box 12 is the main way the IRS checks whether you contributed too much to a retirement plan. If your deferrals across all plans exceed the annual limit ($24,500 for most plans in 2026, or $17,000 for SIMPLE IRAs), the excess has to come out by April 15 of the following year, along with any earnings it produced.¹¹

Miss that April 15 deadline and the excess is taxed twice: once in the year you contributed it, and again when you later take a distribution. A late corrective distribution can also pick up a 10% early withdrawal penalty and 20% mandatory withholding.¹² Mid-year job changes are where this most often goes wrong, because neither employer sees what you deferred at the other.

What to Do If Box 12 Is Wrong

Box 12 errors are more common than people assume. An employer might use the wrong code, enter the wrong amount, or omit a code entirely. The IRS matches W-2 data against your return, and a mismatch can generate a CP2000 notice proposing changes to your reported income, with interest running from your original filing deadline.¹³

Start with your employer’s payroll department and request a corrected W-2 (Form W-2c).¹⁴ If you don’t have a corrected form by the end of February, contact the IRS for help. As a last resort, you can file using Form 4852 as a substitute W-2, reconstructing the correct figures from your pay stubs and explaining your method.¹⁵ Filing with errors you already know about is worse than waiting a little to get the numbers right.

1
Internal Revenue Service. 2026 General Instructions for Forms W-2 and W-3
2
Internal Revenue Service. Retirement Topics – 401(k) and Profit-Sharing Plan Contribution Limits
3
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
4
Internal Revenue Service. Common Errors on Form W-2 Codes for Retirement Plans
5
Internal Revenue Service. Retirement Topics – SIMPLE IRA Contribution Limits
6
Internal Revenue Service. Expanded Availability of Health Savings Accounts under the One, Big, Beautiful Bill Act (OBBBA)
7
Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage
8
IRS.gov. Group Term Life Insurance
9
Internal Revenue Service. Guidance on the Application of Section 83(i)
10
Internal Revenue Service. Form 8839 – Qualified Adoption Expenses
11
Internal Revenue Service. Consequences to a Participant Who Makes Excess Deferrals to a 401(k) Plan
12
Internal Revenue Service. 401(k) Plan Fix-It Guide – Elective Deferrals Exceeded Limits
13
Internal Revenue Service. Topic No. 652, Notice of Underreported Income – CP2000
14
Internal Revenue Service. About Form W-2 C, Corrected Wage and Tax Statements
15
Internal Revenue Service. Form 4852 – Substitute for Form W-2