Written By Alyssa Ray, Accountant
The One Big Beautiful Bill Act (OBBBA) is a major tax law that made many temporary tax provisions permanent while modifying others that affect individual taxpayers and businesses. Because these changes can impact tax planning and deductions, it is important for taxpayers to understand how the law applies to their specific situations. This article explains Section 70110, which permanently eliminates most miscellaneous itemized deductions while preserving certain tax benefits for educators. (Source: IRS Publication 529)
Section 70110 permanently eliminates most miscellaneous itemized deductions subject to the 2% AGI limit for individual taxpayers. This means taxpayers generally cannot deduct expenses such as unreimbursed employee business expenses, investment management fees, and certain legal fees on their federal tax returns. However, the provision preserves and expands special tax benefits for educators by allowing qualifying teachers, counselors, principals, aides, and certain school coaches and athletic administrators to continue deducting eligible unreimbursed classroom and instructional expenses. This deduction is limited to $300 in 2025 and $350 in 2026. This provision primarily impacts individual taxpayers, while providing continued tax relief to educators and those working in K-12 education. (Source: Senate)
Section 70110 has practical implications for taxpayers who previously deducted miscellaneous itemized expenses. Under the OBBBA, the suspension of these deductions is now permanent. As a result, taxpayers should not expect these expenses to reduce their taxable income when preparing for future tax returns. For example, an employee who pays for professional licenses, union dues, work-related travel, or supplies without reimbursement from their employer generally cannot deduct those costs. (Source: H.R.1-OBBBA)
While the OBBBA eliminated miscellaneous itemized deductions, taxpayers may still benefit from a variety of other itemized deductions. Common examples include medical and dental expenses, certain taxes paid, mortgage interest, and charitable contributions. Reviewing these deductions annually can help ensure you maximize available tax-saving opportunities.
With any further questions regarding personal itemized deductions following this provision, please reach out to your tax advisor. Taxpayers should maintain records and receipts for these expenses to support any deduction claimed. Understanding these rules can help individuals avoid errors on their tax returns and identify any deductions that may still be available to them. Contact our office today if any additional questions or guidance arise.
Tax laws continue to evolve, and staying informed can help you identify valuable tax planning opportunities. Feel free to reach out to us with any questions or concerns. Thank you for trusting Darnall, Sikes, & Frederick.
References:
(Source: IRS Publication 529) - https://www.irs.gov/publications/p529
(Source: H.R.1-OBBBA)- https://www.congress.gov/bill/119th-congress/house-bill/1
(Source: Senate) - https://www.finance.senate.gov/imo/media/doc/finance_committee_section-by-section_title_vii5.pdf