In the past, certain employees could deduct a hodgepodge of expenses, known as “miscellaneous expenses,” on their personal tax returns. But recent tax legislation cracked down on this tax break and now the new law—the One Big Beautiful Bill Act (OBBBA) — eliminates it permanently.
Nevertheless, there is some tax consolation for educators. They may benefit from a bigger deduction for their qualified out-of-pocket expenses, starting next year.
Background: Prior to the Tax Cuts and Jobs Act (TCJA), you could deduct qualified miscellaneous expenses in excess of 2% of your adjusted gross income. (AGI). This included investment and tax-related expenses, such as tax preparation fees, and unreimbursed employee business expenses like tools. The deduction was available only to taxpayers who itemized instead of claiming the standard deduction.
But the TCJA suspended the miscellaneous expense deduction from 2018 from 2025. It was scheduled to return in 2026, but now the OBBBA extends the rules on a permanent basis.
Fortunately, another miscellaneous-type deduction is available to educators who personally pay for qualified classroom expenses. This deduction, which can be claimed whether you itemize or not, is limited to $300 a year (raised from $250 in 2022) and is effective through 2025.
What’s more, the deduction isn’t just for teachers (although they are the most common benefactors). It may also be claimed by someone who works as an instructor, counselor, principal, or aide for students in K-12. For instance, a guidance counselor who provides college prep materials to high school juniors may qualify for the educator deduction.
On the other hand, the deduction isn’t available to preschool and day care teachers, camp counselors, college professors and other higher education instructors, self-employed tutors and part-time school aides who don’t work at least 900 hours during the year. It’s also off-limits to parents who homeschool their kids.
Qualified expenses are more than just crayons and construction paper. The extensive list includes the following:
- Books;
- School supplies;
- Computer equipment and software;
- Athletic equipment for physical education,
- Professional development courses or conferences related to course curriculum; and
- Any other item that is appropriate for and helpful to the students and classroom.
Remember that you can’t deduct classroom expenses if you’re reimbursed for them. If a school, teachers union, parent-teacher association, or person pays you back for your outlays, you’re not entitled to a deduction for that amount.
New law lesson: Beginning in 2026, the OBBBA rewrites the rules for the educator expense deduction. Notably, the new law removes the $300 cap, but requires taxpayers to claim the write-off as an itemized deduction. Thus, if you spend $1,000 in unreimbursed expenses, you can deduct the entire $1,000 if you itemize. However, if you claim the standard deduction, you get zero tax benefit.
This could impact year-end tax planning. Educators who itemize may be inclined to wait until 2026 to pay out-of-pocket expenses. Conversely, those who don’t expect to itemize this year or next may as well secure an up-to-$300 tax break ($600 for joint filers if each spouse qualifies) on their 2025 return.
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