Bill Summary
The "Tools Tax Deduction Act" seeks to amend the Internal Revenue Code of 1986 to provide tax deductions for certain expenses incurred by employees in the course of their work. Specifically, it introduces two key provisions:
1. **Above-the-Line Deduction**: Employees will be able to deduct expenses related to their job, such as construction tools and personal protective clothing, without the usual limitation that applies to other deductions. This means that these expenses can be subtracted from their total income, potentially lowering their taxable income.
2. **Miscellaneous Itemized Deductions**: The Act allows for certain expenses incurred by employees in their trade or business to be treated as itemized deductions, exempting them from the 2-percent floor that typically limits such deductions. This means that eligible employees can deduct these expenses even if they do not exceed 2% of their adjusted gross income.
These changes are intended to recognize the costs that employees incur for necessary tools and gear, thus providing financial relief to those in specific trades. The amendments will take effect for taxable years beginning after December 31, 2025.
Possible Impacts
The "Tools Tax Deduction Act" proposed in the legislation could have several effects on individuals. Here are three examples:
1. **Increased Take-Home Pay for Tradespeople**: Employees in construction or trade jobs who are required to purchase their own tools and safety gear could benefit from the above-the-line deductions. This would allow them to reduce their taxable income, resulting in lower overall tax liabilities and increased take-home pay. For example, a carpenter who spends $1,000 on tools may be able to deduct that amount from their income, leading to tax savings that could improve their financial situation.
2. **Encouragement of Compliance with Safety Standards**: By allowing deductions for personal protective clothing and gear, the legislation incentivizes employees to invest in necessary safety equipment. This could lead to a healthier and safer work environment, as employees may be more likely to purchase high-quality protective gear if they can deduct those costs from their taxes. As a result, this could potentially reduce workplace injuries and associated costs for both employees and employers.
3. **Support for Low-Income Workers**: The legislation may particularly benefit low-income employees in service-oriented fields who often have to cover their own expenses for tools and equipment. By allowing these workers to deduct such expenses, the bill could help alleviate some financial burdens they face, enabling them to retain more of their earnings. This could improve their overall quality of life and provide more financial stability, especially in economically challenging times.
These potential effects highlight how tax legislation can directly impact the financial well-being and safety of employees engaged in various service-oriented trades.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2173 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 2173
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 18, 2025
Ms. Budzinski (for herself and Mr. Garbarino) introduced the following
bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Tools Tax Deduction Act''.
SEC. 2. ALLOWANCE OF DEDUCTION FOR CERTAIN EXPENSES OF BEING AN
EMPLOYEE.
(a) Above-the-Line Deduction for Certain Expenses.--Section
62(a)(1) of the Internal Revenue Code of 1986 is amended by adding at
the end the following new sentence: ``The limitation under the
preceding sentence shall not apply to deductions which are attributable
to a trade or business consisting of the performance of services by the
taxpayer as an employee if such deductions are for construction tools,
personal protective clothing and gear, and other expenses in connection
with such place of employment which are necessary for such individual
to be able to work.''.
(b) Allowance of Miscellaneous Itemized Deduction for Other
Expenses of the Trade or Business of Being an Employee.--Section 67(g)
of the Internal Revenue Code of 1986 is amended--
(1) by striking ``2025.--Notwithstanding subsection (a),''
and inserting ``2025.--
``(1) In general.--Notwithstanding subsection (a), except
as provided in paragraph (2),'', and
(2) by adding at the end the following:
``(2) Exceptions for expenses of the trade or business of
being an employee.--
``(A) In general.--Paragraph (1) shall not apply to
miscellaneous itemized deductions for any taxable year
which are itemized deductions attributable to a trade
or business carried on by the taxpayer which consists
of the performance of services by the taxpayer as an
employee.
``(B) Application of 2-percent test.--In applying
subsection (a) for any taxable year to which this
paragraph applies, only the itemized deductions
described in subparagraph (A) shall be taken into
account as miscellaneous itemized deductions.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
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