This bill temporarily reinstates and modifies the deduction for unreimbursed employee business expenses, allowing individuals to deduct 85% of these expenses while adjusting the floor for miscellaneous itemized deductions, and extends the period to claim refunds related to these changes.
Glenn Grothman
Representative
WI-6
The "Employee Business Expense Deduction Reinstatement Act of 2025" reinstates and modifies the deduction for unreimbursed employee expenses, allowing individuals to deduct 85% of costs related to food, lodging, travel, or transportation. It also lowers the floor for miscellaneous itemized deductions from 2% to 1% and extends the statute of limitations for related credit or refund claims by one year. These changes are applicable retroactively as if included in the original 2017 tax law.
Employee Business Expense Deduction Reinstatement Act of 2025: Tax Write-Offs for Work Travel and Meals Are Back
The "Employee Business Expense Deduction Reinstatement Act of 2025" aims to bring back a tax break for people who pay for certain work-related expenses out of their own pockets. Specifically, it lets you deduct 85% of unreimbursed costs for things like food, lodging, travel, and transportation related to your job. This could be a game-changer if, for example, you're a delivery driver using your own car, a construction worker buying your own meals on-site, or a salesperson constantly on the road.
Deductible Details
The bill amends Section 67(g) of the Internal Revenue Code. It also tweaks the rules for "miscellaneous itemized deductions," lowering the threshold you need to hit before you can claim them. Instead of needing these deductions to exceed 2% of your income, it's now just 1%. The Act is retroactive, applying as though it were part of the 2017 tax law changes (Public Law 115-97), but it sunsets in 2027.
Real-World Rollout
Imagine you're a freelance photographer who travels across the country for gigs. Under this bill, 85% of your flights, hotels, and meals during those trips could be deductible. Or, if you're a truck driver, 85% of the money you spend on food while away from home could come off your tax bill. Section 2. This change could mean significant savings for people who regularly incur these kinds of expenses. The extended statute of limitations is also noteworthy. If you think you missed out on deductions because of the old rules, you get an extra year from the enactment of this Act to file a claim for a refund. Section 2.
Potential Challenges
While the bill offers relief, it's not without potential hitches. For one, it might disproportionately benefit higher-income folks who tend to have more of these deductible expenses and are more likely to itemize. There's also the risk of people trying to game the system by inflating expenses. Clear guidelines from the IRS will be crucial to avoid confusion and potential abuse. Lastly, the two-year extension through 2027 might be seen as a temporary fix rather than a long-term solution.