On Monday, Democrats in the U.S. House of Representatives revealed a summary of planned tax changes designed to raise revenue to help pay for $3.5 trillion in new spending.
The provision allows employees to claim up to $250 in dues to a labor organization as an above-the-line deduction. The tax break would go into effect for the 2022 tax year, the one for which your return is due in 2023.
Above-the-line deductions are particularly valuable because they are applied before you calculate your adjusted gross income (AGI) on your tax return. As a result, they reduce both your AGI and your taxable income, whereas so-called “below-the-line deductions” only reduce the latter.
Additionally, a taxpayer can claim above-the-line deductions regardless of whether they itemize their tax deductions (as opposed to claiming the flat standard deduction, which is more common).
Prior to the passage of the federal Tax Cuts and Jobs Act of 2017, members of unions could deduct their dues as part of a tax break for unreimbursed employee expenses. But they could take advantage of that deduction only if they itemized their deductions and only to the extent that their unreimbursed work expenses exceeded 2% of their AGI.
The 2017 tax reform law temporarily changed the rules for such deductions, eliminating them for tax years 2018 through 2025.
In essence, if the House plan becomes law as-is, it would resume the policy of allowing the deduction of union dues sooner — for the 2022 tax year rather than the 2026 tax year. The House plan also would make the deduction available to more taxpayers than could claim it before tax reform.
For now, at least, it does not appear that Congress will restore other deductions for unreimbursed job-related expenses, such as costs that employees pay out of their own pocket for uniforms.