List of Miscellaneous Itemized Deductions

Miscellaneous itemized deductions were a group of expenses that taxpayers could use to lower their taxable income on Schedule A of their Form 1040, covering a range of expenses related to work, investments, and tax preparation. The Tax Cuts and Jobs Act (TCJA) of 2017 suspended the majority of these deductions for individuals. This suspension is effective for tax years 2018 through 2025, but unless new legislation is passed, these deductions are set to be reinstated for the 2026 tax year.

The 2% AGI Limitation and TCJA Changes

Before the TCJA, these deductions were subject to a limitation known as the 2% of Adjusted Gross Income (AGI) floor. This meant a taxpayer could only deduct the total amount of their miscellaneous expenses that exceeded 2% of their AGI. For example, if a taxpayer had an AGI of $75,000, their 2% floor would be $1,500. If they had $2,000 in miscellaneous expenses, they could only deduct $500, the amount exceeding the $1,500 threshold.

This 2% floor often limited the actual tax benefit for many people. The TCJA’s suspension of these deductions was part of a broader trade-off in the law that also included nearly doubling the standard deduction, which simplified tax filing for many individuals who no longer needed to itemize.

Formerly Deductible Expenses

The following categories represent expenses that are no longer deductible on federal returns for most individuals through 2025. These deductions were common before the tax law changes and are currently disallowed at the federal level.

Unreimbursed Employee Expenses

This was a large category of miscellaneous deductions that covered out-of-pocket costs paid by employees that were not reimbursed by their employer. Common examples of previously deductible expenses included:

• Vehicle expenses for business-related driving, using either the standard mileage rate or actual costs for gas, oil, and repairs.
• Travel expenses for business, such as the cost of transportation and lodging.
• Union dues and dues to professional societies.
• The cost of work-related education meant to maintain or improve job skills.
• Work clothes and uniforms if they were required for the job and not suitable for everyday wear.
• Expenses for a home office, tools and supplies used for work, and legal fees related to one’s job.

Tax and Investment Related Expenses

Another group of suspended deductions relates to the costs of managing finances and preparing taxes. Fees paid for tax preparation, whether to a professional or for tax software, were deductible, as were electronic filing fees and any fees paid to contest a tax liability. On the investment side, expenses paid to produce or collect taxable income were deductible. This included investment management and advisory fees, the cost of a safe deposit box used to store investment documents, and subscriptions to investment newsletters.

Other Expenses

A few other expenses also fell under the 2% rule and are now suspended. Hobby expenses were deductible, but only up to the amount of income the hobby generated. For instance, if someone earned $500 from selling pottery, they could deduct up to $500 of their pottery-making expenses, but they must still report the income from the hobby. Certain legal fees paid to produce or collect taxable income outside of a job context were also part of this group.

Remaining Allowable Miscellaneous Deductions

While the TCJA suspended most miscellaneous deductions, a specific list of deductions was not affected by the law. These remaining deductions are still allowed and are not subject to the 2% AGI floor. This means taxpayers can deduct the full amount of these expenses without having to meet an income threshold.

A taxpayer can deduct gambling losses, but only up to the amount of their gambling winnings reported for the year. You are required to report the full amount of winnings as income and then claim the losses as a separate itemized deduction. Another remaining deduction is for casualty and theft losses, but only if the loss occurred in a federally declared disaster area.

Other allowable deductions include:

• Impairment-related work expenses for individuals with disabilities.
• The amortizable premium on taxable bonds.
• Losses from Ponzi-type investment schemes.
• The unrecovered investment in an annuity contract.
• Repayments of more than $3,000 made under a claim of right.

State Tax Considerations

The suspension of miscellaneous itemized deductions at the federal level does not mean they have disappeared entirely, as state income tax laws do not always align with federal tax laws. This divergence is often referred to as “decoupling,” where a state chooses not to adopt certain federal tax code changes. As a result, some states continue to allow taxpayers to deduct some of the miscellaneous expenses that are currently suspended on federal returns.

This means that while you cannot deduct unreimbursed employee expenses on your Form 1040, you might be able to on your state tax return. The rules for which deductions are allowed vary significantly from one state to another. Taxpayers should verify the rules for their specific state by reviewing the instructions for state income tax forms or visiting the website for the state’s department of revenue.