What Can I Write Off as a W-2 Employee?
Learn why most job-related costs are no longer deductible for W-2 employees and explore the individual tax deductions that can still lower your tax bill.
An individual who receives a Form W-2, “Wage and Tax Statement,” from an employer is considered a W-2 employee. Understanding which expenses can be deducted from taxable income is a common concern, as the landscape of available deductions has shifted. This article explores the tax deductions currently available to W-2 employees, outlining the specific rules and qualifications for each.
The Status of Unreimbursed Employee Expenses
A change in tax law has directly impacted the ability of most W-2 employees to deduct job-related costs. The Tax Cuts and Jobs Act of 2017 (TCJA) suspended the miscellaneous itemized deduction for unreimbursed employee expenses. This suspension is in effect for tax years 2018 through 2025, meaning that for now, the majority of employees cannot write off the money they spend for their jobs if their employer does not pay them back.
Before this change, employees could deduct a variety of work-related expenses as long as they exceeded 2% of their adjusted gross income (AGI). Now, many common expenses are no longer deductible for most W-2 employees. This list includes costs such as a home office, even if required by an employer, and work-related vehicle mileage for commuting or other job-related travel.
Other previously deductible items that are now disallowed include work uniforms and clothing, unless they are not suitable for everyday wear. Union dues, work-related education costs, and expenses incurred while searching for a new job in the same profession are also no longer deductible. The law is scheduled to revert to the old rules in 2026, but this could change with future legislation.
Exceptions for Specific Employee Categories
While the general rule suspended most employee expense deductions, a few specific categories of employees were carved out as exceptions. These individuals can still deduct certain unreimbursed job-related expenses.
These exceptions include:
- Armed Forces reservists who can deduct expenses for travel, lodging, and meals for trips more than 100 miles from home related to their reserve duties.
- Qualified performing artists, such as actors or musicians, who may deduct their business expenses if they meet specific criteria, including having multiple employers and earning a limited income.
- Fee-basis state or local government officials who are paid fully or partly on a fee basis can also deduct their work-related expenses.
- Employees with impairment-related work expenses, which are costs for attendant care or other workplace needs for a person with a physical or mental disability, can still claim these as a deduction.
Above-the-Line Deductions for Individuals
Even though job-specific write-offs are limited, all individuals, including W-2 employees, have access to other deductions. These are known as “above-the-line” deductions because they are taken directly on Schedule 1 of Form 1040 to reduce your Adjusted Gross Income (AGI). You do not need to itemize your deductions to claim them and can still take the standard deduction.
One of the most common is the deduction for contributions to a traditional Individual Retirement Arrangement (IRA). Another deduction is for contributions to a Health Savings Account (HSA), which allows individuals with high-deductible health plans to save for medical expenses tax-free. The student loan interest deduction allows taxpayers to deduct up to $2,500 in interest paid on student loans each year. For 2025, this phase-out begins for single filers with a modified adjusted gross income of $85,000 and is completely phased out at $100,000. K-12 educators can also deduct up to $300 for out-of-pocket expenses for classroom materials.
Itemized Deductions on Schedule A
Beyond above-the-line deductions, taxpayers can choose to itemize deductions on Schedule A of Form 1040. This choice is only beneficial if the total of your itemized deductions is greater than the standard deduction amount for your filing status. For the 2025 tax year, the standard deduction is $15,000 for single filers and married individuals filing separately, and $30,000 for married couples filing jointly.
Several major categories of expenses can be itemized:
- Medical and dental expenses that exceed 7.5% of your Adjusted Gross Income (AGI).
- State and local taxes (SALT), which includes income, sales, and property taxes, but this is capped at a total of $10,000 per household per year.
- Interest paid on your mortgage, subject to certain limits depending on when the loan was taken out and the amount of the mortgage.
- Charitable contributions to qualified organizations.
How to Claim Your Deductions
Once you have determined which deductions you are eligible to take, the final step is to report them correctly on your tax return. The process differs depending on the type of deduction.
Deductions that reduce your Adjusted Gross Income, often called “above-the-line” deductions, are reported on Schedule 1 of Form 1040. This includes deductions for educator expenses, HSA contributions, and student loan interest. The total from Schedule 1 is then transferred to the main Form 1040.
For itemized deductions, you must complete and file Schedule A. Here you will list expenses such as medical costs, state and local taxes, and home mortgage interest. The total from Schedule A is then entered on your Form 1040, but only if this total is higher than your available standard deduction.