Sponsors (5)
The bill provides targeted tax relief to service and construction workers for work-related expenses, boosting take-home pay for those beneficiaries while reducing federal revenue and adding administrative complexity and potential inequities in who qualifies.
Construction and other service-performing employees who buy tools, protective clothing, or other qualifying work-related items can claim above-the-line deductions, lowering taxable income immediately and increasing take-home pay.
Miscellaneous employee business expenses for service-performing employees are excluded from the 2% itemized deduction floor, making it easier for those with work expenses to realize tax benefits when they do itemize.
By permitting above-the-line treatment for qualifying work expenses, more taxpayers — including those who do not itemize — can receive tax relief, potentially increasing after-tax take-home pay for affected households.
The new deductions reduce individual income tax revenue, which could modestly increase the federal deficit or require offsets from other revenues or spending cuts.
Tax administration and compliance will become more complex because the IRS must define which expenses qualify and may need to audit claims, increasing burden for the agency and taxpayers.
If the relief is narrowly defined to specific listed items or occupations, employees with other legitimate work-related expenses may be left without comparable above-the-line relief, creating unequal treatment.
Based on analysis of 2 sections of legislative text.
Permits an above-the-line deduction for employee tools and protective clothing and narrows the 2% miscellaneous itemized deduction floor to only count employee trade-or-business deductions.
Official title: To amend the Internal Revenue Code of 1986 to allow for deductions for the performance of certain services by a taxpayer, and for other purposes.
Introduced March 18, 2025 by Nikki Budzinski · Last progress March 18, 2025
Creates a new above-the-line deduction for employees’ trade-or-business expenses for construction tools, personal protective clothing/gear, and other necessary workplace items, and changes the miscellaneous itemized deduction rules so that only employee trade-or-business itemized deductions are counted when applying the 2%-of-AGI floor. The tax changes take effect for taxable years beginning after December 31, 2025.