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This is one of the most common questions we get from new and potential clients. Unfortunately, the answer is “no”. I absolutely understand why people would ask, because they used to be able to prior to the Tax Cuts and Jobs Act of 2017 (TCJA).
Prior to the tax reform, employees could deduct unreimbursed business expenses such as travel, supplies, and home office expenses on their tax returns if they itemized their deductions and the expenses exceeded 2% of their adjusted gross income (AGI). Self-employed taxpayers, on the other hand, may still deduct ordinary and necessary business expenses against self-employment income. While the deduction for employee business expenses will return in 2026, navigating tax rules related to these expenses can be challenging.
Some of the key provisions of the TCJA include:
- Lowering the corporate tax rate from 35% to 21%
- Creating a new 20% deduction for pass-through businesses (such as partnerships, sole proprietorships, and S-corporations)
- Doubling the standard deduction for individual taxpayers
- Reducing the individual income tax rates and brackets
- Eliminating or limiting many deductions and credits, including the state and local tax deduction and the personal exemption
- Increasing the child tax credit and creating a new credit for other dependents
- Changing the estate and gift tax exemption
Standard Deduction
The law raised the standard deduction in 2018 to:
- $24,000 from $12,700 for married couples filing jointly ($27,700 in the 2023 tax year)
- $12,000 from $6,350 for single filers ($13,850 in the 2023 tax year)
- $18,000 from $9,350 for heads of household ($20,800 for the 2023 tax year)
Without further action, the TCJA tax cut for individuals and households is set to expire at the end of 2025. The reform has led to a lot of confusion for taxpayers and is bound to lead to more confusion after 2025. It is important to partner with a CPA who can help you understand your tax situation and advise you on the best steps to take. Contact Richmond CPA to setup a consultation.