For 2026, employee tax deductions start with the standard deduction — $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for head of household — and expand from there through a short list of above-the-line adjustments and, for filers whose totals justify it, itemized deductions on Schedule A.1Internal Revenue Service. Revenue Procedure 2025-32 Filers 65 or older or blind add $1,650 to those figures, or $2,050 if they are also unmarried. Most W-2 employees take the flat standard deduction. Whether you should depends on what else you can legitimately claim.
Standard Deduction or Itemize
Every return begins with one choice: take the flat standard deduction or list qualifying expenses on Schedule A. The standard deduction requires no receipts and no math beyond your filing status. Itemizing means totaling documented expenses — property taxes, mortgage interest, medical bills above a threshold, charitable gifts — and claiming the sum instead.2Internal Revenue Service. About Schedule A (Form 1040), Itemized Deductions Itemizing pays off only when your documented total beats the standard amount. Homeowners in high-tax states and filers with a major medical year are the usual candidates.
Deductions You Can Take Without Itemizing
Above-the-line deductions come off your gross income before you reach adjusted gross income, and you get them whether or not you itemize. Four of them apply directly to employees.
Educator Expenses
K–12 teachers and other eligible educators can deduct up to $300 for unreimbursed classroom supplies, books, computer equipment, and professional development. Two educators filing jointly can each claim $300 for a combined $600.3Internal Revenue Service. Topic No. 458, Educator Expense Deduction This is one of the few work-related write-offs still available to rank-and-file employees.
Student Loan Interest
You can deduct up to $2,500 in student loan interest paid during the year, on federal or private loans used for higher education. The benefit phases out at higher incomes: for 2026, single filers start losing it around $85,000 modified AGI and lose it entirely near $100,000; joint filers phase out between roughly $175,000 and $205,000.4Internal Revenue Service. Topic No. 456, Student Loan Interest Deduction
HSA Contributions
If you’re enrolled in a high-deductible health plan, Health Savings Account contributions are deductible. The 2026 limits are $4,400 for self-only coverage and $8,750 for family coverage, plus a $1,000 catch-up at age 55 or older.5Internal Revenue Service. Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans Payroll contributions are already excluded from your W-2 wages, so no separate deduction is needed. Direct contributions you make yourself go on Form 8889.
Traditional IRA Contributions
The 2026 IRA contribution limit is $7,500, or $8,600 if you’re 50 or older.6Internal Revenue Service. Retirement Topics – IRA Contribution Limits Whether that contribution is deductible depends on your income and whether you or your spouse are covered by a workplace retirement plan. If neither of you is, the full contribution is deductible. If you are, the deduction phases out above income thresholds the IRS adjusts each year.
Itemized Deductions Worth Checking
For employees whose expenses beat the standard deduction, these are the categories that usually do the work on Schedule A.
State and Local Taxes (SALT)
The SALT deduction covers property taxes plus either state income taxes or state sales taxes. The cap changed significantly for 2026. Under the One Big Beautiful Bill, enacted in mid-2025, the SALT ceiling rose to roughly $40,000 (indexed for inflation) for most filers, up from the $10,000 cap that applied from 2018 through 2025. Married filing separately gets half. The cap phases down for higher earners: once AGI exceeds $500,000, the deductible amount gradually shrinks back toward $10,000.7Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One Big Beautiful Bill
Mortgage Interest
Homeowners who itemize can deduct interest on up to $750,000 in mortgage debt used to buy, build, or substantially improve a main or second home. The limit is $375,000 for married filing separately. The One Big Beautiful Bill made this cap permanent.8Internal Revenue Service. Publication 936, Home Mortgage Interest Deduction Mortgages taken out on or before December 15, 2017 keep the older $1 million limit.
Medical and Dental Expenses
Unreimbursed medical and dental costs are deductible only to the extent they exceed 7.5% of your AGI. At an $80,000 AGI, the first $6,000 in medical bills gets you nothing; only spending above that counts.9Internal Revenue Service. Topic No. 502, Medical and Dental Expenses Qualifying costs include out-of-pocket insurance premiums (not those paid pre-tax through payroll), prescriptions, surgery, dental, and vision. This one usually matters in a big-health-event year.
Charitable Contributions
Donations to qualified charities remain deductible when you itemize, but a new floor applies starting in 2026: contributions equal to the first 0.5% of your AGI produce no deduction. At $100,000 AGI, the first $500 in gifts is not deductible; only the amount above counts. Cash donations are generally deductible up to 60% of AGI, with lower ceilings for certain property and certain organizations. Keep receipts, and get a written acknowledgment for any single donation of $250 or more.
Unreimbursed Work Expenses: Mostly Gone
This is where W-2 employees hit a wall. Before 2018, unreimbursed job costs — home office equipment, professional dues, work travel, continuing education — were deductible as miscellaneous itemized deductions above a 2% AGI floor. The Tax Cuts and Jobs Act suspended that deduction in 2018, and the One Big Beautiful Bill made the elimination permanent.10Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions If your employer doesn’t reimburse you for supplies, mileage, or memberships, those costs stay out of pocket with no federal write-off.
Four employee categories are still allowed to deduct unreimbursed work expenses using Form 2106:
- Armed Forces reservists who travel more than 100 miles from home for reserve duties
- Qualified performing artists who meet specific income and employment requirements
- Fee-basis state or local government officials paid entirely through fees rather than salary
- Employees with impairment-related work expenses necessary to do the job
If you’re in one of these groups, keep mileage logs, receipts, and detailed records. The IRS scrutinizes these claims closely because so few filers still qualify.11Internal Revenue Service. Instructions for Form 2106
What Changed for 2026
The One Big Beautiful Bill, signed in 2025, made most of the Tax Cuts and Jobs Act’s individual provisions permanent instead of letting them lapse at the end of 2025. A few points matter for employees planning around deductions.
The higher standard deduction remains, indexed for inflation, which is why the flat amount continues to beat itemizing for most filers. Personal exemptions, which the TCJA had zeroed out temporarily, are now permanently repealed, so the trade of higher standard deduction for lost per-person exemptions is locked in.
The SALT cap increase to about $40,000 is the biggest itemized-deduction shift. Filers in high-tax states who used to hit the $10,000 ceiling may find itemizing worthwhile now, especially with a sizable mortgage on top. The phase-down above $500,000 AGI limits the benefit for high earners.
Top-bracket filers face a new limit that caps the value of all itemized deductions at 35 cents on the dollar. Every $1,000 in deductions saves no more than $350 in tax, no matter the marginal rate.
Records to Keep
Any deduction you claim has to be defensible if the IRS asks. Keep receipts, bank statements, canceled checks, and written acknowledgments for at least three years from the date you file, or two years from the date you paid the tax, whichever is later.12Internal Revenue Service. How Long Should I Keep Records
Some situations require longer. If you underreport gross income by more than 25%, the IRS has six years to audit. Worthless securities and bad debt claims require seven years of records. If you never file, there is no statute of limitations. For anything tied to property — mortgage interest, home improvements, closing costs — hold the records until the limitations period runs on the year you sell, because those documents are also what you’ll use to figure your gain or loss at sale.