Before 2018, if you were an employee, you could deduct your unreimbursed job expenses to the extent these expenses, along with certain other miscellaneous expenses, were more than 2% of your adjusted gross income (AGI). One of the biggest changes to tax laws in recent years was eliminating this deduction for 2018 through 2025 under the Tax Cuts and Jobs Act. Then, legislation passed in 2025 permanently eliminated the deduction for most unreimbursed employee business expenses.
If you work as an employee, you might have various job-related expenses you end up paying out of your own pocket, such as:
Again, prior to the passage of the Tax Cuts and Jobs Act, employees were able to deduct unreimbursed job expenses as a personal itemized deduction. This wasn't the most generous deduction in the world—such expenses were deductible only if, and to the extent, they exceeded 2% of an employee's adjusted gross income. However, it was better than nothing.
Unfortunately, as of 2018, employees can deduct nothing. The Tax Cuts and Jobs Act temporarily eliminated all miscellaneous itemized deductions subject to the 2% of AGI limit, including the deduction for unreimbursed employee expenses. The One Big Beautiful Bill Act in 2025 made the suspension of unreimbursed employee business expense deductions permanent.
So, most employees who spend their own money for things like job-related car expenses, travel, education, or tools get no deduction at all. (Only specific categories of employees, such as qualified performing artists, Armed Forces reservists, fee-based state or local government officials, and disabled employees with impairment-related work expenses, may continue to deduct certain job-related expenses. Also, self-employed individuals may still deduct business expenses.)
This makes it important to seek reimbursement for such expenses from your employer. Employees can come out ahead if they trade a salary reduction for such reimbursement. Salary is fully taxable, but the reimbursement is tax-free if made under an accountable plan.
Don't pay them! The best thing to do with expenses you incur while on the job is not to pay them yourself. Have your employer pay them. Use a company credit card or have your employer billed directly for the expense. If you must pay for something out of your own pocket, have your employer reimburse you. Provided they are for work-related expenses and are properly documented, these reimbursements aren't taxable income to you and shouldn't be included in the W-2 form your employer files with the IRS showing how much you were paid for the year. Your employer, meanwhile, gets to deduct these expenses as a business expense.
Make sure you know what your employer's reimbursement policy is. If the policy is to reimburse the expense, be sure to claim it. It might be worth your while to take a salary reduction in order to get your employer to reimburse you for some expenses. Note, however, that your employer might be required by law to reimburse you for work-related expenses.
Any reimbursement you receive from your employer should be made under an "accountable plan." An accountable plan is a set of procedures that ensures that employees don't get reimbursed for personal expenses. In brief, you must:
If you fail to follow the rules, any reimbursements you receive must be treated as employee income subject to tax.
If you have questions about tax deductions, contact a local tax lawyer or another tax adviser, such as a certified public accountant.
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