IRS Form 2106, Employee Business Expenses, is the form a small group of workers still uses to calculate the job costs they can deduct when their employer did not pay them back. For the 2026 tax year, only four categories of employees can file it: Armed Forces reservists traveling for duty, qualified performing artists who meet a strict income test, fee-basis state or local government officials, and employees with impairment-related work expenses.1Internal Revenue Service. IRS Form 2106 – Employee Business Expenses If you are a regular W-2 employee who bought tools, drove your own car, or paid for training your company did not reimburse, the federal deduction is not available to you, and this form will not help.
Why the Form No Longer Works for Most Employees
Until 2018, any employee could potentially deduct unreimbursed job expenses as a miscellaneous itemized deduction on Schedule A, though only the portion above 2% of adjusted gross income counted. The Tax Cuts and Jobs Act of 2017 suspended that category of deductions starting with the 2018 tax year, with an original sunset at the end of 2025.2EveryCRSReport.com. Unreimbursed Employee Job Expenses and the Suspension of the Miscellaneous Itemized Deduction
Many taxpayers assumed the deduction would come back in 2026. It will not. The One Big Beautiful Bill Act, signed in 2025, removed the sunset and made the suspension permanent. The statute now bars miscellaneous itemized deductions for any tax year beginning after December 31, 2017, with no expiration date.3Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions For the ordinary W-2 employee, Form 2106 has no purpose.
Who Can Still File Form 2106
Congress preserved four exceptions when it suspended the underlying deduction, and those exceptions survived the 2025 permanent extension.4Internal Revenue Service. Instructions for Form 2106 Three of the four groups treat the deduction as an adjustment to income, which lowers taxable income whether or not you itemize. The fourth is an itemized deduction.
Armed Forces Reservists
If you are a member of a reserve component and you travel more than 100 miles from home to perform reserve duties, you can deduct the cost of that travel.5Office of the Law Revision Counsel. 26 USC 62 – Adjusted Gross Income Defined The Army, Navy, Marine Corps, Air Force, and Coast Guard Reserve all qualify, along with the Army and Air National Guard and the Reserve Corps of the Public Health Service. Your deductible amount is capped at the federal per diem rate for lodging, meals, and incidentals, plus the standard mileage rate for driving, parking, ferries, and tolls.6Internal Revenue Service. Instructions for Form 2106 – Employee Business Expenses The deduction lands on Schedule 1.
Qualified Performing Artists
Performing artists face a four-part test that disqualifies most of them. To claim the deduction, all four must be true:7Internal Revenue Service. Publication 529 – Miscellaneous Deductions
- You performed services in the performing arts as an employee for at least two employers during the year.
- You received wages of $200 or more from at least two of those employers.
- Your allowable business expenses connected to performing arts were more than 10% of your gross income from performing arts work.
- Your adjusted gross income, before this deduction, was $16,000 or less.8Legal Information Institute. 26 USC 62(b)(1) – Qualified Performing Artist
That $16,000 ceiling is the sticking point. Meet all four, and the deduction goes on Schedule 1.
Fee-Basis State or Local Government Officials
If a state or local government pays you in whole or in part on a fee-per-service basis rather than a salary, the ordinary business expenses you cover yourself for that job are deductible.6Internal Revenue Service. Instructions for Form 2106 – Employee Business Expenses Justices of the peace and notaries public who earn per-service fees are typical examples. Like the two groups above, this deduction is reported on Schedule 1.
Employees With Impairment-Related Work Expenses
An employee with a physical or mental disability can deduct costs that are necessary to do the job because of the disability. Attendant care at the workplace and specialized equipment at your workstation are common examples.6Internal Revenue Service. Instructions for Form 2106 – Employee Business Expenses This category works differently from the other three. The deduction goes on Schedule A, not Schedule 1. It is not subject to the old 2% AGI floor, but you have to itemize to claim it.7Internal Revenue Service. Publication 529 – Miscellaneous Deductions For 2026, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household, so your combined itemized deductions must clear that number before this one produces any benefit.9Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
What You Can Deduct on the Form
Assuming you fall into one of the four groups, Form 2106 covers travel expenses and other ordinary and necessary work costs.
Travel Away From Your Tax Home
Travel expenses apply when your work takes you away from your tax home, the city or area where your main place of business sits. Transportation, lodging on overnight trips, and incidentals like tips and baggage fees all count. Meals during travel are deductible at 50%, and the form applies that reduction for you. The travel has to be temporary. If an assignment is realistically expected to last more than a year, the IRS treats it as indefinite and disallows the travel deduction, even if the job actually ends sooner.10Internal Revenue Service. Topic No. 511, Business Travel Expenses
Tools, Uniforms, and Required Training
Beyond travel, the form captures work tools and supplies you buy yourself, required uniforms not suitable for everyday wear, and employer-mandated training that maintains or improves the skills you use in your current job. Costs must be ordinary in your line of work and necessary to do the job.11Internal Revenue Service. About Form 2106, Employee Business Expenses
One expense does not belong here. The home office deduction is limited to self-employed taxpayers. No W-2 employee, including the four eligible categories, can claim it.12Internal Revenue Service. Simplified Option for Home Office Deduction
Vehicle Expenses: Two Methods
If you drive your personal vehicle for qualifying work, Form 2106 offers two calculation methods. The standard mileage rate is the simpler option. For 2026 it is 72.5 cents per mile, up from 70 cents in 2025.13Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile That rate covers gas, insurance, repairs, depreciation, and maintenance. Parking and tolls are added on top. Drive 3,000 business miles and the deduction is $2,175 before parking and tolls.
The actual expense method tracks every cost of running the vehicle and applies your business-use percentage. Deductible costs include gas, oil, repairs, tires, insurance, registration, and depreciation.14Internal Revenue Service. Topic No. 510, Business Use of Car If total vehicle costs were $12,000 and you used the car 40% for business, the deduction is $4,800. The record-keeping burden is heavier, and depreciation on a passenger vehicle is subject to dollar caps. To keep the option open, you generally have to choose the standard mileage rate in the first year you place a vehicle in service for business; after that, you can switch year to year. Actual expenses often win with an expensive vehicle and low mileage; the standard rate usually wins with high business mileage in a cheaper car.
Records the IRS Expects
Every expense needs contemporaneous records showing amount, date, place, and business purpose. Keep itemized receipts for lodging, meals, and other purchases. Credit card and bank statements help but do not substitute for a receipt that shows what you bought.
Vehicle expenses need their own log. Record the date, destination, business purpose, and odometer readings for each trip, either in a notebook or a tracking app. Entries made close to the time of the trip are what the IRS looks for. Reconstructing a year of driving from memory at filing time is the kind of evidence that fails on audit. For other expenses, save the receipt, note the business purpose on it, and file by category. A written record made at the time of the expense can back up a lost receipt, but it is harder to defend.
Where the Number Ends Up on Your Return
The four groups take different paths on the 1040, and putting the number in the wrong place costs you the deduction.
Reservists, qualified performing artists, and fee-basis government officials all report their Form 2106 total on Schedule 1, line 12. That is an above-the-line adjustment to adjusted gross income, so you get the benefit whether you take the standard deduction or itemize.4Internal Revenue Service. Instructions for Form 2106 Given how high the 2026 standard deduction sits, most of these filers will not itemize, and the above-the-line treatment matters.
Employees with impairment-related work expenses put the Form 2106 amount on Schedule A instead.7Internal Revenue Service. Publication 529 – Miscellaneous Deductions The expense is not subject to the 2% floor, but claiming it requires itemizing. If mortgage interest, state taxes, charitable contributions, and the impairment-related expenses together do not exceed the standard deduction for your filing status, the number on Form 2106 produces no tax benefit.
Check Your Employer’s Reimbursement Plan First
Before you file anything, look at how your employer handles expense reimbursements. Under an accountable plan, the employer pays you back for substantiated expenses and requires you to return any excess. Those payments are not taxable wages on your W-2, and you cannot also deduct the same expenses on Form 2106.15Internal Revenue Service. Revenue Ruling 2003-106 Under a nonaccountable plan, reimbursements are added to your taxable wages, and eligible filers can deduct the underlying expenses because the reimbursement was already taxed. If your employer partially reimburses a cost under an accountable plan, only the unreimbursed portion is deductible.
State Returns May Still Allow the Deduction
The permanent federal suspension does not bind every state. Roughly eight states, including California, New York, Minnesota, and Pennsylvania, still allow some form of unreimbursed employee business expense deduction on the state return. Rules and thresholds vary; some states apply the old federal 2% AGI floor, others use their own calculations. If you live in a state with an income tax and paid significant unreimbursed work expenses, your state return is worth a look even when the federal return offers you nothing.