Legislative and Policy Analysis
Section 70110: Termination of miscellaneous itemized deductions other than educator expenses
Executive Summary
Section 70110 permanently ends the scheduled return of miscellaneous itemized deductions that were subject to the two-percent adjusted-gross-income floor before the Tax Cuts and Jobs Act. Under pre-OBBBA law, those deductions were suspended only for taxable years 2018 through 2025 and would have returned in 2026. Section 70110 removes that sunset, so deductions such as unreimbursed employee business expenses, investment expenses, tax preparation fees, many professional dues, and similar miscellaneous itemized deductions remain unavailable after 2025.[1]
The section creates a narrow educator-expense exception. It allows certain unreimbursed educator expenses to be claimed as an itemized deduction, not subject to the two-percent floor, and without the prescribed dollar limit that applies to the separate above-the-line educator expense deduction.[2] It also expands the educator category for this itemized deduction to include interscholastic sports administrators and coaches, and it broadens covered supplies to include certain health and physical education instructional materials.[3]
The Joint Committee on Taxation estimated the section would increase federal revenues by $231.553 billion over fiscal years 2025 through 2034 relative to the present-law baseline.[4] That revenue increase comes from denying deductions that otherwise would have reduced taxable income beginning in 2026, partly offset by the new educator-expense carveout.
What Section 70110 Actually Does
Section 70110 amends Internal Revenue Code section 67. The core change is simple: it changes the heading and operative language of section 67(g) so that the disallowance of miscellaneous itemized deductions applies to taxable years beginning after 2017, instead of only to taxable years beginning after 2017 and before 2026.[5]
The practical effect is that the former two-percent-floor miscellaneous itemized deduction category does not come back in 2026. Before 2018, taxpayers who itemized could deduct miscellaneous itemized deductions only to the extent those expenses exceeded two percent of adjusted gross income. Public Law 115-97 temporarily suspended those deductions for 2018 through 2025. Section 70110 makes that suspension permanent.[6]
Common affected expenses include:
| Expense category | Treatment after Section 70110 | Practical effect |
|---|---|---|
| Unreimbursed employee business expenses | Generally disallowed as miscellaneous itemized deductions | Employees cannot deduct many out-of-pocket work costs unless another Code provision applies |
| Investment expenses | Generally disallowed as miscellaneous itemized deductions | Investors cannot deduct many advisory or management expenses as miscellaneous itemized deductions |
| Tax preparation fees | Generally disallowed as miscellaneous itemized deductions | Individual tax-preparation costs generally do not reduce federal taxable income |
| Professional dues and similar expenses | Generally disallowed as miscellaneous itemized deductions | Employees and individuals bear these costs with after-tax dollars unless reimbursed or otherwise deductible |
| Educator expenses | Allowed as a special itemized deduction for qualifying expenses | Itemizing educators may deduct qualifying expenses beyond the separate above-the-line educator deduction |
The section’s fiscal effect is a revenue increase, not a direct appropriation or outlay. JCT estimated the following revenue effects for the provision:
| Provision | Estimated federal revenue effect, fiscal years 2025 through 2034 | What the estimate reflects |
|---|---|---|
| Termination of miscellaneous itemized deductions other than educator expenses | $231.553 billion revenue increase | Higher federal receipts from permanently denying miscellaneous itemized deductions, partly offset by the educator-expense exception |
The educator exception is narrower than restoring all miscellaneous itemized deductions but broader than the existing above-the-line educator deduction. The provision adds to section 67(b) a new category for “deductions allowed by section 162 for educator expenses,” meaning these educator expenses are not treated as miscellaneous itemized deductions subject to the general disallowance.[7] The new definition looks to expenses that would be described in section 62(a)(2)(D), but without the dollar limit, with broader treatment for health and physical education supplies, with “instructional activity” substituted for “in the classroom,” and with interscholastic sports administrators and coaches added to the eligible educator group.[8]
The section applies to taxable years beginning after December 31, 2025.[9]
Legislative Mechanism
Section 70110 uses three main statutory moves.
First, it revises section 67(g) to make the post-2017 disallowance permanent. The prior Code language suspended miscellaneous itemized deductions for taxable years beginning after December 31, 2017, and before January 1, 2026. Section 70110 strikes the ending date and changes the heading from “2018 Through 2025” to “Beginning After 2017.”[10]
Second, it amends section 67(b), which lists deductions that are not miscellaneous itemized deductions. By adding educator expenses to that list, the section creates a special itemized deduction pathway for qualifying educator expenses even while miscellaneous itemized deductions generally remain disallowed.[11]
Third, it adds a new educator-expense definition to section 67. That definition cross-references the existing above-the-line educator expense structure in section 62 but modifies it for the new itemized deduction. The new itemized deduction is not capped by the above-the-line dollar limitation and is not confined to materials used “in the classroom.”[12]
This is a tax-base provision. It does not appropriate money, create a grant program, establish a benefit application process, or direct an agency to distribute funds. Instead, it changes how taxable income is calculated on individual income tax returns.
Expenditure Tracking and Reporting Protocol
Section 70110 affects federal finances through tax administration and revenue estimation rather than through direct spending. The fiscal pathway is therefore tracked mainly through IRS return processing, Treasury tax administration, Joint Committee on Taxation revenue estimates, CBO budget effects, and aggregated IRS Statistics of Income data.
The section-specific public tracking will be limited. Taxpayers will report itemized deductions and educator-related deductions on tax forms and schedules, but public data will generally be aggregated. The revenue effect will be visible in JCT and CBO estimates, Treasury and IRS tax administration materials, and later aggregated tax statistics, but it will not appear like a grant award, contract, or agency outlay in USAspending.gov.
flowchart TD
A[Public law] --> B[IRS guidance]
B --> C[Taxpayer returns]
C --> D[Disallowed deductions]
C --> E[Educator itemized deduction]
D --> F[IRS processing]
E --> F
F --> G[Treasury receipts]
F --> H[IRS statistics]
G --> I[JCT estimates]
G --> J[CBO budget effects]
H --> K[Public aggregate data]
I --> L[Congress oversight]
J --> L
K --> M[Delayed public visibility]
The main tracking sources are:
| Tracking source | Likely role | Visibility limits |
|---|---|---|
| IRS return processing | Applies the deduction rules on individual returns | Return-level data is confidential |
| Treasury receipts and tax administration | Captures revenue effects through aggregate collections | Section-specific effects are modeled, not directly observed in real time |
| JCT revenue estimates | Scores the provision for congressional budget purposes | Estimates depend on baseline assumptions and taxpayer behavior |
| CBO budget effects | Incorporates tax estimates into broader budget analysis | Usually reported at aggregated legislative levels |
| IRS Statistics of Income | May later show itemized deduction patterns | Public data is delayed and aggregated |
Because the provision permanently denies a broad class of deductions while carving out educator expenses, the cleanest public measure is the JCT revenue estimate. The precise taxpayer-level distribution of lost deductions will be difficult to isolate publicly because many taxpayers will not itemize, many affected expenses are not separately visible once disallowed, and taxpayer return information is confidential.
Day-to-Day Government Process Changes
For the IRS, Section 70110 stabilizes the post-2017 treatment of miscellaneous itemized deductions instead of requiring a return to pre-2018 rules in 2026. Tax forms, instructions, software validation, examiner training, and taxpayer guidance can continue treating miscellaneous itemized deductions as generally disallowed.
The IRS will still need to administer the new educator-expense exception. That means guidance and forms must distinguish between the existing above-the-line educator expense deduction and the new itemized deduction for educator expenses. The above-the-line deduction remains available under present law, while the new itemized deduction may matter for educators who itemize and have qualifying expenses beyond the above-the-line limit.[13]
For tax administrators, the section likely reduces some complexity by preventing the return of a broad miscellaneous itemized deduction category. But it also creates a targeted compliance question: whether claimed educator expenses meet the new definition, whether the taxpayer is within the eligible educator category, and whether the expenses were used as part of instructional activity.
For Congress and budget agencies, the section shifts the baseline permanently. Future tax expenditure and revenue estimates will treat the disallowance as ongoing law rather than as a temporary TCJA provision scheduled to expire.
Effects on Consumers
The consumer impact is mixed but mostly negative for taxpayers who would have claimed miscellaneous itemized deductions after 2025.
For many employees, the section means unreimbursed work expenses remain nondeductible. This matters for workers who pay out of pocket for tools, uniforms, professional dues, home office costs, continuing education, travel, or other job-related costs that are not reimbursed by an employer and are not deductible under another Code provision.
For investors, the section continues the disallowance of many investment-related expenses that historically could have been miscellaneous itemized deductions. This can raise after-tax investment costs for taxpayers who pay advisory, management, or other income-producing expenses personally.
For educators, the section creates a targeted benefit. Eligible teachers, instructors, counselors, principals, aides, interscholastic sports administrators, and coaches may benefit if they itemize and have qualifying unreimbursed expenses. The benefit is strongest for educators with costs above the existing above-the-line educator deduction and enough other itemized deductions to make itemizing worthwhile.
The limitation is that taxpayers who take the standard deduction generally do not benefit from a new itemized deduction. The existing above-the-line educator deduction remains important for educators who do not itemize.
Effects on Businesses
Section 70110 does not directly tax businesses, but it can change workplace reimbursement incentives.
Employers may face more pressure to reimburse employee expenses because employees cannot generally deduct unreimbursed job expenses as miscellaneous itemized deductions. Businesses that already use accountable reimbursement plans may be less affected, while businesses that expect employees to absorb work-related costs may see more employee dissatisfaction or compensation pressure.
Tax preparation firms and tax software providers may benefit from simplification in one respect because a broad category of formerly deductible miscellaneous itemized expenses does not return. However, they will need to build and explain the new educator-expense itemized deduction rules.
Investment advisers and financial planners may see continued client concern about the after-tax cost of advisory fees. The section does not prohibit those fees, but it generally prevents individual taxpayers from reducing taxable income through miscellaneous itemized deductions for those costs.
Education-related vendors may see a modest indirect effect if educators with itemized deductions are more willing to buy qualifying supplies, books, equipment, or instructional materials. That effect is likely limited because the deduction helps only taxpayers who itemize and have eligible expenses.
Environmental and Climate Impact
The environmental and climate impact is minimal. Section 70110 is an individual income tax deduction provision. It does not directly authorize development, change environmental review, fund infrastructure, subsidize fossil fuels, rescind climate funding, or alter pollution-control requirements.
The immediate legal effect is fiscal and tax-administrative: miscellaneous itemized deductions remain disallowed, while qualifying educator expenses receive a narrow itemized deduction exception. The reasonably foreseeable implementation effects are changes in tax filing, taxpayer behavior, reimbursement practices, and educator expense claims. The environmental pathway is remote.
There could be small indirect effects if the educator-expense exception supports purchases of classroom materials, technology, sports equipment, or supplies, but those effects are too diffuse to characterize as materially positive or negative for greenhouse-gas emissions, air pollution, water quality, habitat, biodiversity, land disturbance, or climate resilience.
Existing environmental safeguards are not weakened or bypassed. Section 70110 does not compress NEPA review, alter permitting, reduce enforcement, or change public participation requirements. Environmental justice and local community effects are also minimal because the section does not target pollution sources, land use, energy systems, transportation systems, or environmental-health programs.
Impact Summary
Section 70110 is a permanent tax-base change. It raises federal revenue by permanently denying miscellaneous itemized deductions that otherwise would have returned in 2026, while preserving a limited itemized deduction path for qualifying educator expenses.
The biggest taxpayer impact falls on individuals with unreimbursed employee expenses, investment expenses, tax preparation fees, professional dues, or similar costs. Those taxpayers continue to bear these expenses with after-tax dollars unless another deduction, reimbursement arrangement, or business structure applies.
Educators receive a targeted exception, but its value depends on itemizing. The existing above-the-line educator deduction remains important for educators who take the standard deduction, while the new itemized deduction is more useful for educators with larger qualifying expenses and enough other deductions to itemize.
The business impact is indirect. Employers may face greater pressure to reimburse expenses, tax preparers must administer a narrower but still nuanced educator rule, and financial advisers may need to explain why investment fees remain nondeductible for many individual clients.
The environmental and climate effects are minimal because the section changes individual income tax deduction rules rather than environmental funding, energy subsidies, permitting, pollution control, or land-use policy.
Key References and Sourcing
| Source | Relevance |
|---|---|
| Public Law 119-21, Section 70110 | Primary statutory text showing the amendments to Internal Revenue Code section 67 and the effective date. |
| Joint Committee on Taxation, General Explanation of the Tax Provisions of Public Law 119-21 | Explains present law, the permanent repeal of miscellaneous itemized deductions, and the new educator-expense itemized deduction. |
| Joint Committee on Taxation, JCX-35-25 | Provides the estimated revenue effects of Section 70110 over fiscal years 2025 through 2034. |
| Internal Revenue Code section 67, House Office of the Law Revision Counsel | Shows the codified structure of the two-percent floor and miscellaneous itemized deduction rules. |
| IRS, Topic No. 458, Educator Expense Deduction | Describes the continuing above-the-line educator expense deduction and current IRS treatment of qualifying educator expenses. |
| Congressional Research Service summary of tax provisions in P.L. 119-21 | Provides a secondary congressional summary of Section 70110’s treatment of miscellaneous itemized deductions and educator expenses. |
[1] Joint Committee on Taxation, “General Explanation Of The Tax Provisions Of Public Law 119–21,” discussion of Section 70110 and miscellaneous itemized deductions, https://www.jct.gov/publications/2026/jcs-1-26/.
[2] Public Law 119-21, Section 70110(b), adding educator expenses to section 67(b) and defining educator expenses in section 67(g), https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm.
[3] Public Law 119-21, Section 70110(b)(2), educator expense definition including instructional activity and interscholastic sports administrators or coaches, https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm.
[4] Joint Committee on Taxation, “Estimated Revenue Effects Relative To The Present Law Baseline Of The Tax Provisions In ‘Title VII – Finance’ Of The Substitute Legislation As Passed By The Senate To Provide For Reconciliation Of The Fiscal Year 2025 Budget,” JCX-35-25, July 1, 2025, line item 10, https://www.jct.gov/publications/2025/jcx-35-25/.
[5] Public Law 119-21, Section 70110(a), amendment to section 67(g), https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm.
[6] Joint Committee on Taxation, “General Explanation Of The Tax Provisions Of Public Law 119–21,” present law and explanation of Section 70110, https://www.jct.gov/publications/2026/jcs-1-26/.
[7] Public Law 119-21, Section 70110(b)(1), amendment to section 67(b), https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm.
[8] Public Law 119-21, Section 70110(b)(2), new section 67(g), https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm.
[9] Public Law 119-21, Section 70110(c), effective date, https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm.
[10] Public Law 119-21, Section 70110(a), https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm.
[11] Public Law 119-21, Section 70110(b)(1), https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm.
[12] Joint Committee on Taxation, “General Explanation Of The Tax Provisions Of Public Law 119–21,” explanation of educator expense deduction under Section 70110, https://www.jct.gov/publications/2026/jcs-1-26/.
[13] IRS, “Topic No. 458, Educator Expense Deduction,” updated April 15, 2026, https://www.irs.gov/taxtopics/tc458.
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