Sponsors (2)
The bill lowers taxes for workers with unreimbursed job expenses (including retroactive relief), at the cost of reduced federal revenue, added compliance complexity, and benefits concentrated among certain workers rather than broadly distributed.
Taxpayers who incur unreimbursed employee meal, lodging, travel, or transport expenses can deduct 85% of those costs and face a lower AGI floor (reduced from 2% to 1%), reducing their taxable income and increasing after-tax pay for affected workers.
Taxpayers eligible for the deduction can claim the change retroactively (subject to the extended 1-year claim window), potentially receiving refunds or credits for prior years.
All taxpayers (via the federal budget) face reduced federal tax revenue because broader deductions lower receipts, which could increase deficits or force cuts or shifts in public spending.
Middle-class families and higher-income employees are likelier to benefit, so the fiscal cost primarily aids workers with unreimbursed job expenses rather than low-income households, raising equity concerns.
Taxpayers and the IRS will face added complexity and compliance burden from retroactive claims and calculating the 85% special exception, increasing preparation costs and administrative workload.
Based on analysis of 2 sections of legislative text.
Permits individuals to deduct 85% of unreimbursed employee food, lodging, travel, and transportation expenses and lowers the applicable floor to 1%.
Official title: To amend the Internal Revenue Code of 1986 to allow unreimbursed employee expenses to be taken into account as miscellaneous itemized deductions.
Introduced February 27, 2025 by Glenn Grothman · Last progress February 27, 2025
Allows many employees to deduct most unreimbursed business-related food, lodging, travel, and transportation costs on their individual tax returns by permitting 85% of those expenses to be claimed as miscellaneous itemized deductions and lowering the applicable floor to 1 percent. The change is written to apply retroactively as if included in the 2017 tax law change it modifies, and it extends the time window for taxpayers to file refund or credit claims tied to this change if the normal statute of limitations would otherwise expire before one year after enactment.