Tax Services

New Changes to the Employee Business Expense Deduction

At this point, you now know that Tax Cuts and Jobs Act (TCJA) recently passed, reforming taxes for Americans. One of the major provisions impacting individuals is the employee business expense deduction. Under the old tax rules, employees could deduct ordinary and necessary work-related expenses that their employers didn’t reimburse, like:

  • Mileage
  • Travel expenses (excluding commuting)
  • Local lodging expenses
  • Car depreciation (if traveling for work)
  • Business meal and entertainment expenses
  • Business and gift expenses

(For examples of the most common deductible job-related expenses, see IRS Pub. 463.)

Previously, you could deduct unreimbursed expenses that were more than 2% of your adjusted gross income (AGI) or 50% of the unreimbursed cost of meals.

New Law Repeals All Job-related Expense Deductions

Under the new Tax Cuts and Jobs Act, all job-related expense deductions are suspended except the above-the-line deduction for military reservists.

This change goes into effect for tax years beginning after December 31, 2017, until December 31, 2025.

You Can No Longer Deduct Work-related Expenses Incurred

The TCJA suspends all miscellaneous itemized deductions (whether they are subject to the 2% of AGI floor), with the exception for military reservists, but retains prior law for deducting gambling expenses. Military reservists – or those in civilian and military reserve duty – can still deduct ordinary and necessary expenses related to the business expense deduction.

Keep in mind that you can still use the business expense deduction on your 2017 return if you qualify. For more support, get matched with a tax specialist at Block Advisors now.

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