Where Do I Put Union Dues on My Taxes?
Understand how union dues impact your taxes. Explore federal and state regulations, and discover specific situations where your payments may be deductible.
Understand how union dues impact your taxes. Explore federal and state regulations, and discover specific situations where your payments may be deductible.
For most employees, union dues are not deductible on federal income tax returns for tax years 2018 through 2025. This change stems from the Tax Cuts and Jobs Act (TCJA) of 2017.
The TCJA suspended the deduction for miscellaneous itemized deductions that were previously subject to a 2% adjusted gross income (AGI) limit. Union dues, as an unreimbursed employee business expense, fall under this suspended category. This means that W-2 employees generally cannot claim a federal tax deduction for union dues paid during this period. Consequently, for these tax years, union dues are not reported on Schedule A (Itemized Deductions) of Form 1040.
While federal tax law generally prohibits the deduction of union dues for employees during the specified period, state tax laws can differ significantly. Some states may still allow a deduction for union dues, even if the federal government does not. This variation means that a taxpayer’s ability to deduct union dues can depend on their state of residence.
For example, some states, such as California, Hawaii, Minnesota, New York, and Pennsylvania, have tax codes that allow for the deduction of union dues. Other states, however, may conform to federal tax law and not permit such deductions. The specific rules and forms for claiming these deductions vary widely from state to state. Individuals should consult their specific state’s tax department website or seek advice from a qualified tax professional regarding their state tax obligations.
Although union dues are generally not deductible for most employees on their federal tax returns, there are specific scenarios where they may still be deductible. A primary exception applies to self-employed individuals. If an individual operates their own business and pays union dues as an ordinary and necessary business expense, these dues can be deducted.
Such deductions for self-employed individuals are typically reported on Schedule C (Profit or Loss from Business) of Form 1040. This distinction highlights the difference in tax treatment between an employee receiving a W-2 and a self-employed individual who may receive a Form 1099 or operate as a sole proprietor. For self-employed individuals, union dues are considered a direct cost of doing business.
Other, less common circumstances might also allow for a deduction, such as for certain performing artists, reservists, or fee-basis government officials. However, these specific situations are highly specialized and subject to particular criteria and limitations. The most common exception to the general non-deductibility rule for union dues involves individuals who are self-employed.