Miscellaneous Itemized Deductions: No Longer Deductible

One of the greatest changes the under the Tax Cuts and Jobs Act, which was made permanent by the One Big Beautiful Bill Act in 2025, was the elimination of many personal itemized deductions. Taxpayers are no longer able to deduct expenses such as union dues, investment fees, or hobby expenses. However, gambling losses remain deductible.

Personal Expenses That Are No Longer Deductible

A large group of deductions lumped together in a category called "miscellaneous itemized deductions" used to be deductible to the extent they exceeded 2% of a taxpayer's adjusted gross income. (I.R.C. § 67(g) (2025).) The TCJA suspended most miscellaneous itemized deductions for tax years 2018 through 2025, and the One Big Beautiful Bill Act made the elimination permanent. So, these deductions won't return in 2026.

Unreimbursed Job Expenses

These are work-related expenses an employee pays out of their own pocket. They include:

• work-related travel, transportation, and meal expenses
• union dues
• business liability insurance premiums
• depreciation on a computer or cell phone your employer requires you to use in your work
• dues to professional societies
• education (work-related)
• home office expenses for part of your home used regularly and exclusively in your work (now, the home office deduction is only available to self-employed individuals, not employees)
• expenses of looking for a new job in your present occupation
• legal fees related to your job
• subscriptions to professional journals and trade magazines related to your work
• tools and supplies used in your work, and
• work clothes and uniforms (if required and not suitable for everyday use).

These expenses aren't deductible anymore. So, you should seek to have your employer reimburse you for them. This reimbursement is tax-free as long as you properly document your expenses. Alternatively, you could seek a pay raise to help pay for these expenses, but such a raise would be taxable.

Eligible educator expenses are deductible as miscellaneous itemized deductions, not subject to the 2% rule, starting in 2026.

Investment Expenses

Expenses you pay for personal investing are also not deductible as a personal itemized deduction. This category includes:

• investment advisory and management fees
• fees for legal and tax advice related to your investments
• trustee fees to manage IRAs and other investment accounts, and
• rental fees for a safe deposit box.

Tax Preparation Fees

Tax preparation fees are likewise not deductible. This includes costs for hiring a tax pro or buying tax preparation software or tax publications. It also includes any fee you pay for electronic filing of your return. If you have a tax pro prepare both your personal and business taxes, ask for a separate bill for your business return. Why? The fees to prepare your business return remain a fully deductible business expense—they aren't a personal itemized deduction.

Fees to Fight the IRS

You may not deduct as an itemized deduction attorneys' fees, accounting fees, and other fees you incur to determine, contest, pay, or claim a refund of any tax.

Hobby Expenses

A hobby is an activity you engage in primarily for a reason other than to earn a profit—for example, to have fun. Before 2018, hobbyists were permitted to deduct their hobby-related expenses up to the amount of hobby income they earned each year (but only expenses over 2% of AGI were deductible). The TCJA eliminated the itemized deduction for hobby expenses for 2018 through 2025, and the One Big Beautiful Bill Act eliminated this deduction permanently. So, you aren't able to deduct any expenses you earn from hobbies.

However, you still have to report and pay tax on any income you earn from a hobby. However, if your hobby involves selling goods to customers, you may deduct your costs of goods sold when calculating your hobby income. For example, if your hobby is making and selling pottery, you can deduct the cost of making each pot you sell from your hobby income.

Personal Expenses that Remain Deductible

A few miscellaneous itemized expenses remain deductible for taxpayers who itemize.

Gambling Losses

Gambling losses are deductible, but only to offset the income from gambling winnings. Also, starting with tax year 2026, only 90% of qualified gambling losses can be deducted, and only to the extent of reported gambling winnings.

Investment Interest

If you borrow money to purchase an investment, the interest you pay on the loan is called "investment interest." Investment interest remains deductible for taxpayers who itemize.

However, the deduction is limited to the amount of taxable investment income you earn each year, such as dividends, royalties, or interest. Any disallowed investment interest is carried over to deduct in future years. Ordinarily, investment income doesn't include any capital gains or qualifying dividends that enjoy favorable tax treatment. But you can make an election to include long term capital gain and qualifying dividends in your investment income. This can allow you to deduct a larger amount of investment interest. When you do this, however, your long-term capital gain and qualifying dividends must be taxed at your ordinary income tax rates, not the usually lower capital gains rates.

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Talk to a Tax Pro

If you need more help, talk to a tax professional, such as a certified public accountant or a tax attorney.