Miscellaneous Itemized Deductions: What TCJA Cut and What Remains

Miscellaneous itemized deductions subject to the 2% adjusted gross income floor are permanently gone from the federal tax code. The Tax Cuts and Jobs Act of 2017 suspended them through 2025, and the One, Big, Beautiful Bill Act, signed into law on July 4, 2025, removed the sunset date and made the elimination permanent. If you used to write off unreimbursed employee expenses, tax preparation fees, or investment management costs on Schedule A, those deductions no longer exist for individual filers and are not coming back.¹

What Was Permanently Eliminated

The eliminated category is broad. The IRS lists the main items as employee business expenses, tax preparation fees, investment expenses (including management fees), employment-related educational expenses, job search costs, hobby losses, and safe deposit box fees.²

Unreimbursed Employee Business Expenses

This was the largest category for most filers. It covered any work-related cost your employer did not pay for: home office expenses, work travel, professional uniforms and protective clothing, tools and supplies, continuing education, and union dues. None of these are deductible for W-2 employees anymore, regardless of the amount you spend.³

The home office deduction causes constant confusion. If you work from home as a W-2 employee, you cannot deduct a home office on your federal return, even if your employer requires you to work remotely. The IRS is explicit on this point.⁴

Self-employed filers are in a completely different position. If you file Schedule C as a sole proprietor or independent contractor, your business expenses come off your business income directly. The miscellaneous itemized deduction rules never applied to Schedule C, so the elimination does not touch you.

Tax Preparation and Investment Fees

Fees for preparing your return, buying tax software, and paying for investment advice or custodial services all fell under the 2% floor. None are deductible on your personal return now.²

One narrow carve-out: if you pay tax preparation fees related to a business you run on Schedule C, the portion allocable to the business return is still deductible as a business expense. Only the personal portion lost its deduction.

Job Search Expenses

Resume preparation, employment agency fees, and travel for interviews within your current field used to be deductible. The whole category is now off the table.²

Itemized Deductions That Survived

Section 67(b) lists itemized deductions that were never treated as “miscellaneous” and were never subject to the 2% floor. These remain fully available on Schedule A:¹

Mortgage interest on up to $750,000 in home acquisition debt ($375,000 if married filing separately).
State and local taxes, capped at $10,000 combined ($5,000 if married filing separately).
Charitable contributions to qualified organizations, subject to percentage-of-income limits.
Medical and dental expenses exceeding 7.5% of adjusted gross income.
Gambling losses, deductible only up to reported gambling winnings and only if you itemize.⁵
Casualty and theft losses on income-producing property (investment or business property, not personal-use items).
Estate tax on income in respect of a decedent.
Impairment-related work expenses for filers with a physical or mental disability that limits employment.⁶

The gambling rules tightened under the permanent changes. All expenses incurred in connection with wagering, not just the losses themselves, must now fit within the limit of your reported winnings.⁷

Workers Who Can Still Deduct Business Expenses

A few worker classifications can still claim unreimbursed business expenses. They either report on Schedule C or take above-the-line adjustments that reduce adjusted gross income directly. The IRS limits Form 2106 to these specific groups.⁸

Statutory Employees

A statutory employee receives a W-2 with the “Statutory employee” box in box 13 checked. Income and business expenses go on Schedule C, so the miscellaneous itemized deduction rules never applied. The IRS recognizes three types: full-time life insurance sales agents, certain commission drivers, and certain traveling salespeople and homeworkers.⁹

Qualified Performing Artists

Performing artists can deduct work-related expenses as an adjustment to income if they meet four requirements: they performed for at least two employers during the tax year, received at least $200 in wages from each of those employers, had business expenses exceeding 10% of their gross income from performing arts, and had adjusted gross income of $16,000 or less before claiming the deduction.⁸

That $16,000 cap is strict and not indexed for inflation. Exceed it by a dollar and you lose the deduction entirely.

Fee-Basis Government Officials

State and local officials paid solely on a fee basis can deduct unreimbursed business expenses as an above-the-line adjustment. They use Form 2106 and report the result on Schedule 1. This is a narrow category covering officials such as notaries public and part-time commissioners who receive fees for specific services rather than a salary.⁸

Employees With Disabilities

If you have a disability and pay impairment-related work expenses so you can do your job, you can also use Form 2106. These costs are not subject to the 7.5% medical expense threshold or the eliminated 2% floor.⁶

Above-the-Line Deductions Still on the Table

Some work-related expenses survived as adjustments to income on Schedule 1. They reduce adjusted gross income whether or not you itemize.

Eligible K-12 teachers, instructors, counselors, principals, and aides who work at least 900 hours during the school year can deduct up to $300 in unreimbursed classroom supplies. If both spouses are eligible educators and file jointly, the combined limit is $600, though neither spouse can exceed $300 individually. Qualifying purchases include books, supplies, computer equipment, and professional development courses.¹⁰

Members of a reserve component of the Armed Forces who travel more than 100 miles from home for reserve duties can deduct unreimbursed travel expenses as an above-the-line adjustment. The deduction covers expenses from the time you leave home until you return and is limited to the federal rate for reserve-related travel. You complete Form 2106 and carry the result to Schedule 1.¹¹

Should You Still Itemize?

With the old miscellaneous deductions gone, the standard deduction is the better choice for most filers. For the 2026 tax year, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.¹²

Your remaining Schedule A items have to clear that higher bar. In practice, the filers who still benefit from itemizing tend to be homeowners with large mortgage interest payments, taxpayers in high-tax states (limited by the $10,000 SALT cap), and those with significant charitable contributions or medical expenses.

Records for What Remains

The deductions that survived still demand solid documentation. The IRS expects receipts, canceled checks, account statements, and other records that verify what you spent and why.³

Gambling losses carry the most specific requirements. You need a contemporaneous diary or log recording the date, type of wager, name and location of the establishment, other people present, and the amounts won and lost. W-2G forms, wagering tickets, and bank withdrawal records strengthen the position. Without this level of detail, the IRS can disallow the deduction entirely.³

For the narrow worker categories that can still deduct business expenses, mileage logs, equipment receipts, and records of employer reimbursement policies are essential. If you claim expenses the IRS later disallows due to negligence, you face an accuracy-related penalty equal to 20% of the resulting underpayment.¹³

1
Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions
2
Internal Revenue Service. Tax Cuts and Jobs Act – Individuals
3
Internal Revenue Service. Publication 529 – Miscellaneous Deductions
4
Internal Revenue Service. Simplified Option for Home Office Deduction
5
Internal Revenue Service. Topic No. 419, Gambling Income and Losses
6
Internal Revenue Service. Publication 907 – Tax Highlights for Persons With Disabilities
7
U.S. House of Representatives, Ways and Means Committee. The One, Big, Beautiful Bill – Section by Section
8
Internal Revenue Service. Instructions for Form 2106
9
Internal Revenue Service. Instructions for Schedule C (Form 1040)
10
Internal Revenue Service. Topic No. 458, Educator Expense Deduction
11
Internal Revenue Service. Publication 3 – Armed Forces Tax Guide
12
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
13
Office of the Law Revision Counsel. 26 US Code 6662 – Imposition of Accuracy-Related Penalty on Underpayments