HR 2173119th CongressIn Committee

Tools Tax Deduction Act

Introduced: Mar 18, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Tools Tax Deduction Act would create new tax relief for employees who must buy tools, personal protective equipment (PPE), and other work-related expenses to perform their job. Specifically, it would add an above-the-line deduction (deductions that reduce adjusted gross income) for these specified expenses incurred in a trade or business that consists of performing services as an employee. It would also modify the miscellaneous itemized deduction rules so that, for these employee-related expenses, the usual 2-percent-of-AGI floor does not apply. In short, eligible tool and PPE costs would be deductible, and the deduction would be more easily usable (either above the line or as an itemized deduction without the 2% floor) for tax years beginning after December 31, 2025 (i.e., starting with 2026). The bill focuses on construction tools, PPE, and related work expenses necessary to perform employment duties.

Key Points

1Creates an above-the-line deduction (reduces AGI) for certain expenses of being an employee, specifically for construction tools, PPE and related work expenses necessary to perform employment duties.
2Expands the category of deductible employee expenses by carving out these costs from the usual limits that apply to miscellaneous itemized deductions.
3Modifies Section 67(g) to exempt these employee-related expenses from the 2-percent-of-AGI miscellaneous deduction floor; if the taxpayer itemizes, only these specific expenses would be counted under this special treatment.
4Effective for taxable years beginning after December 31, 2025 (start with the 2026 tax year).
5Applies to a trade or business that consists of the performance of services by the taxpayer as an employee.

Impact Areas

Primary group/area affected:- Employees who must purchase tools, PPE, and other necessary items to perform their jobs (e.g., construction workers, tradespeople, technicians, and similar occupations). This could lower their after-tax cost for job-related purchases.Secondary group/area affected:- Taxpayers who itemize deductions, since these specific expenses would be treated separately from the general miscellaneous itemized deduction rules and would not be subject to the 2-percent floor.Additional impacts:- Administrative and compliance considerations for taxpayers and the IRS, including defining which expenses qualify (construction tools, PPE, and “other expenses” necessary to perform the job) and ensuring proper documentation.- Potential revenue impact due to increased deductions for employee-related expenses starting in 2026.- Implications for employers, who may experience shifts in reimbursement practices or payroll tax planning, though the bill does not directly mandate employer actions.

Generated by gpt-5-nano on Nov 19, 2025