Updated September 29, 2026. Quick answer: code DD in Box 12 is the reported cost of your employer-sponsored health coverage. The IRS instruction says the amount reported with code DD is not taxable, so it does not add to your taxable wages.
What the IRS tells the employer
The instructions read: “Use this code to report the cost of employer-sponsored health coverage. The amount reported with code DD is not taxable.”
What that means for your return
The instruction is a reporting rule, not a limit or a deduction: the IRS states the amount is not taxable. The instructions point employers to “Additional reporting guidance, including information about the transitional reporting rules that apply,” on IRS.gov for the details.
Do not confuse it with code W
Code DD is the cost of coverage. Code W is your employer’s contributions to a health savings account.
Common mistakes
- Reading code DD as extra income. The IRS instruction says it is not taxable.
- Confusing DD with W. W is HSA money that went into your account, DD is the reported cost of coverage.
Every code in one place: the Box 12 codes table. If a withdrawal from one of these accounts is your question, see the Form 1099-R Box 7 codes.
Figures verified against the IRS 2026 General Instructions for Forms W-2 and W-3 on September 30, 2026.
Sources
- IRS, 2026 General Instructions for Forms W-2 and W-3: https://www.irs.gov/pub/irs-pdf/iw2w3.pdf
- IRS, About Form W-2, Wage and Tax Statement: https://www.irs.gov/forms-pubs/about-form-w-2
Code meanings are read from the IRS 2026 General Instructions for Forms W-2 and W-3 (Box 12) at irs.gov on September 29, 2026. General information, not tax advice. Your own facts decide the outcome, and a payroll professional, a preparer or the IRS is the right place to confirm anything consequential.