What Can I Write Off as a W-2 Employee? Adjustments and Credits

As a W-2 employee, you can write off very little that ties directly to your job. The Tax Cuts and Jobs Act eliminated unreimbursed employee business expenses in 2018, and the One Big Beautiful Bill Act of 2025 made that change permanent.¹ What’s left comes in three forms: above-the-line adjustments that lower your income before tax, itemized deductions available to any taxpayer, and credits that cut your bill directly. With the 2026 standard deduction at $16,100 for single filers and $32,200 for married couples filing jointly, most salaried workers will skip itemizing and lean on adjustments and credits instead.²

What You Can No Longer Deduct

Before 2018, employees could deduct unreimbursed job costs — professional dues, required uniforms, a work laptop, business travel, continuing education, license fees, union dues, and a home office maintained for the employer’s convenience — as miscellaneous itemized deductions, to the extent they exceeded 2% of adjusted gross income. That entire category is gone. The One Big Beautiful Bill Act struck the sunset date on the suspension, so the 2% miscellaneous itemized deduction is off the federal return permanently with no scheduled return.¹

A required work laptop your employer didn’t reimburse, professional license fees, union dues, and business travel out of your own pocket produce no federal deduction. There are narrow exceptions for a few categories of workers, covered further down, but if you’re a standard salaried employee, assume unreimbursed work costs are non-deductible and focus your energy on what still works.

Above-the-Line Adjustments You Can Still Claim

Above-the-line adjustments come off your income on Schedule 1 of Form 1040 before AGI is calculated, and you get them whether or not you itemize. A lower AGI can also help you qualify for other credits and deductions that phase out at higher income, so these are worth more than their face value.

Educator Expenses

Teachers, instructors, counselors, and principals who work at least 900 hours in a school year can deduct up to $350 for unreimbursed classroom spending in 2026.³ Two qualifying spouses filing jointly can deduct up to $700 combined, but neither can exceed $350 individually. Books, classroom supplies, computer equipment and software, and supplemental materials all qualify.⁴ This is one of the only surviving write-offs directly tied to a W-2 job.

Health Savings Account Contributions

If you’re enrolled in a High Deductible Health Plan, HSA contributions come off the top. For 2026, the limits are $4,400 for self-only coverage and $8,750 for family coverage, plus a $1,000 catch-up if you’re 55 or older. The HDHP has to carry a minimum annual deductible of $1,700 for self-only coverage or $3,400 for family coverage.⁵

HSAs get three tax benefits stacked together: contributions lower taxable income, the balance grows untaxed, and withdrawals for qualified medical expenses come out tax-free. Employer contributions count toward the annual limit but aren’t included in your taxable wages, so they extend the benefit without eating into your paycheck.

Traditional IRA Contributions

The 2026 Traditional IRA contribution limit is $7,500, with an extra $1,100 catch-up if you’re 50 or older.⁶ How much you can deduct depends on your income and whether you or your spouse are covered by a workplace retirement plan.

The 2026 phase-out ranges are:

Single filers covered by a workplace plan: $81,000 to $91,000
Married filing jointly, contributing spouse covered: $129,000 to $149,000
Not covered, but spouse is covered: $242,000 to $252,000
Married filing separately, covered by a plan: $0 to $10,000

If neither spouse has a workplace plan, you can deduct the full contribution regardless of income. Even where the deduction phases out, contributing still buys tax-deferred growth until withdrawal.

Student Loan Interest

You can deduct up to $2,500 in interest paid on qualified student loans each year, no itemizing required.⁷ The loan has to have been taken out solely for qualified higher education expenses, and someone else can’t be claiming you as a dependent. For 2026, the deduction phases out between $85,000 and $100,000 of modified AGI for single filers and between $175,000 and $205,000 for joint filers. Married filing separately blocks the deduction entirely.

The Few Employees Who Can Still Deduct Job Costs

A handful of W-2 categories kept the ability to write off unreimbursed work expenses. These workers use Form 2106 and report the total on Schedule 1, so it reduces AGI rather than requiring itemization.⁸

Armed Forces reservists can deduct travel for service performed more than 100 miles from home.
Qualified performing artists who worked for at least two employers, earned at least $200 from each, had business expenses exceeding 10% of their performing arts income, and had AGI of $16,000 or less before the deduction can write off performing-arts costs.
Fee-basis state and local government officials paid entirely by fees rather than salary can deduct expenses tied to that role.

Workers with impairment-related work expenses can deduct costs necessary to perform their job, though those go on Schedule A as an itemized deduction.⁸ Active-duty members of the Armed Forces and certain intelligence community employees who move due to a permanent change of station can also deduct unreimbursed moving expenses above the line.⁹ No other W-2 employees qualify for the moving expense deduction.

Itemized Deductions Worth Considering

Itemizing on Schedule A only pays off if your total beats the standard deduction, $16,100 single or $32,200 joint for 2026.² Most W-2 employees won’t clear that bar. Homeowners with significant mortgage interest, property taxes, or charitable giving often do. Three categories drive nearly all of the value.

State and Local Taxes

SALT covers state and local income taxes (or sales taxes, if you choose that route), plus real estate and personal property taxes. The TCJA capped this at $10,000; the One Big Beautiful Bill Act raised the cap to $40,400 for 2026 and indexed it going forward.² Once modified AGI passes roughly $505,000, the higher cap phases back toward $10,000. For most salaried workers below that threshold, the full $40,400 applies.

Home Mortgage Interest

You can deduct interest on up to $750,000 of mortgage debt used to buy, build, or substantially improve your primary or secondary home; the limit is $375,000 if you’re married filing separately. The One Big Beautiful Bill Act made the $750,000 cap permanent. Mortgages taken out before December 16, 2017, remain grandfathered under the older $1 million ceiling. Interest on a home equity loan or HELOC is deductible only if you used the funds to buy, build, or substantially improve the home securing the loan.

Charitable Contributions

Cash donations to qualified charities are deductible up to 60% of AGI. Contributions of appreciated property like stock generally cap at 30% of AGI. Keep a bank record or written receipt for every cash gift, and get a written acknowledgment from the charity for any donation of $250 or more before you file.

Starting in 2026, a new 0.5% AGI floor applies: charitable deductions only count to the extent they exceed 0.5% of your AGI. On $100,000 of income, the first $500 in gifts produces no tax benefit. And if you take the standard deduction, charitable contributions give you nothing on the federal return.

Tax Credits That Cut Your Bill Dollar for Dollar

Credits beat deductions of the same size because they reduce your actual tax, not just your taxable income. A $2,000 deduction in the 22% bracket saves $440. A $2,000 credit saves $2,000. Several are available whether you itemize or not.

Child Tax Credit

For 2026, the Child Tax Credit is worth up to $2,200 per qualifying child under 17, and up to $1,700 of that is refundable, meaning you can receive it even if you owe no federal income tax.³ Both amounts are now indexed for inflation. The credit phases out at $200,000 of AGI for single filers and $400,000 for joint filers, dropping $50 for every $1,000 of income above those thresholds.

Earned Income Tax Credit

The EITC is a fully refundable credit for low-to-moderate-income workers. The amount depends on filing status, earned income, and number of qualifying children. For 2025, the maximum ranged from about $660 with no children to roughly $8,200 with three or more; 2026 amounts are adjusted upward for inflation. Income limits are relatively tight — a joint-filing couple with three children loses the credit entirely once income passes roughly $70,000, and single filers with no children phase out around $20,000. Investment income above roughly $12,000 also disqualifies you.

Child and Dependent Care Credit

If you pay for the care of a child under 13 or a dependent who can’t care for themselves so that you can work, you can claim a percentage of those costs.¹⁰ Qualifying expenses cap at $3,000 for one qualifying person or $6,000 for two or more, and the credit runs from 20% to 35% depending on AGI, with higher earners at the lower end. At the 20% floor, that’s up to $600 for one dependent or $1,200 for two. The credit is non-refundable, so it can zero out your tax but won’t generate a refund on its own. Amounts you route through an employer dependent care FSA reduce the eligible expenses dollar for dollar.

Check Your State Return

The federal deduction for unreimbursed employee business expenses is gone, but a number of states never conformed to that change. In those states, you can still write off professional dues, required tools, and business travel on the state return, typically under rules that mirror the old federal 2% floor. Conformity varies widely, so it’s worth checking your own state’s rules. A W-2 employee in a non-conforming state can pick up meaningful savings on the state side even when the federal return gives them nothing.

1
Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions
2
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
3
Internal Revenue Service. Revenue Procedure 2025-32 – Inflation-Adjusted Items for 2026
4
Internal Revenue Service. Topic No. 458 – Educator Expense Deduction
5
Internal Revenue Service. Notice 2026-05 – Expanded Availability of Health Savings Accounts Under the OBBBA
6
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
7
Internal Revenue Service. Topic No. 456 – Student Loan Interest Deduction
8
Internal Revenue Service. Instructions for Form 2106
9
Internal Revenue Service. Topic No. 455 – Moving Expenses for Members of the Armed Forces and the Intelligence Community
10
Internal Revenue Service. Child and Dependent Care Credit Information