(Tax Year 2024 – Filed in 2025)
Overview
If you’ve received your Form W-2 and noticed Code DD in Box 12, you might be wondering what it means—and whether it affects your taxes.
Code DD reports the cost of employer-sponsored health coverage under the Affordable Care Act (ACA). It’s included on your W-2 for informational purposes only and does not impact your taxable income.
This reporting requirement is mandated by IRC § 6051(a)(14) and helps the IRS and employees understand the total value of health benefits provided during the tax year.
What Is Code DD on Form W-2?
Code DD shows the total cost of health insurance coverage provided to you, including both:
- The portion paid by your employer, and
- The portion paid by you through payroll deductions.
This amount is reported in Box 12, next to Code DD, and is not taxable to you.
Why Is Code DD Reported?
- Required under the Affordable Care Act (ACA)
- Helps the IRS track the cost of health care coverage across the U.S.
- Allows employees to see the full value of their employer-provided benefits
Important: Code DD is informational only. It does not increase your tax liability and is not included in Box 1 (wages).
What’s Included in the Code DD Amount?
The reported amount generally includes:
- Employer-paid premiums for medical insurance
- Employee-paid premiums (pre-tax and post-tax)
- Vision and dental coverage if part of a comprehensive medical plan
- Contributions to Health Reimbursement Arrangements (HRAs)
What’s NOT included:
- Health Savings Account (HSA) contributions (reported under Code W)
- Flexible Spending Account (FSA) contributions made by the employee
- Stand-alone dental or vision plans
- Life insurance and disability insurance
Example Scenario
Raj works for a tech company and earns $85,000 in 2024. His employer provides health insurance with the following costs:
- Employer pays: $6,000
- Raj pays (pre-tax payroll deductions): $3,600
His W-2 will show the following:
- Box 1: $85,000 (unchanged by Code DD)
- Box 12: Code DD – $9,600 (combined cost of coverage)
- Box 12: Code D – $10,000 (401(k) contribution, if applicable)
The $9,600 under Code DD is not taxable and does not need to be reported anywhere on Form 1040.
Does Code DD Affect My Taxes?
- No. It’s informational only.
- It’s not deductible and does not reduce your taxable income.
- You do not need to take any action based on this code.
Step-by-Step: What to Do With Code DD
- Locate Code DD in Box 12 of your W-2
- Confirm the amount reflects both employer and employee portions
- Do nothing further – It is not included in your tax return
- Keep your W-2 as supporting documentation in case of IRS review
Conclusion
Code DD on your W-2 reflects the total cost of your health insurance coverage but does not affect your tax return. It’s there to provide transparency into employer-provided benefits and fulfill ACA requirements. You don’t need to enter this value on your tax return or take any action because of it.
Call to Action
Still confused about what Code DD means or have questions about other codes on your W-2? Schedule a consultation with Anshul Goyal, CPA EA FCA for a clear explanation of your W-2 and expert help with your 2024 tax filing.
Top 5 FAQs: W-2 Code DD
Does Code DD affect my taxable income?
No. It is for informational purposes only and does not increase your taxes.
What is included in the Code DD amount?
The total cost of employer-sponsored health insurance, including both employer and employee-paid portions.
Should I report Code DD on my tax return?
No. You do not need to enter it on Form 1040 or any supporting schedules.
Is Code DD the same as HSA contributions?
No. HSA contributions are reported under Code W, which may affect your tax return.
Can I deduct the Code DD amount?
No. Since it’s not taxable, it’s also not deductible.
About Our CPA
Anshul Goyal, CPA EA FCA is a U.S.-licensed Certified Public Accountant and Enrolled Agent authorized to represent clients before the IRS. He provides expert tax advice for W-2 employees, self-employed individuals, and Indian professionals in the U.S., ensuring full IRS compliance and maximizing tax efficiency.
Schedule a meeting with Anshul here:
https://calendly.com/anshulcpa/
Disclaimer
This blog is intended for informational use only. It does not constitute legal or tax advice. Always consult a qualified tax advisor or CPA for personalized guidance.