Form 2106 for 2025: Employee Business Expenses Deduction Guide with Updated Rates

Understanding Form 2106: Employee Business Expense Deductions in 2025

Form 2106 is an IRS tax document designed for employees to deduct ordinary and necessary expenses related to their work. Ordinary expenses are those commonly accepted in a specific profession, while necessary expenses are essential for conducting business activities.

Since the Tax Cuts and Jobs Act (TCJA) of 2018, most taxpayers can no longer claim unreimbursed employee business expenses. However, certain groups remain eligible to use Form 2106, including Armed Forces reservists, qualified performing artists, fee-based state or local government officials, and employees with impairment-related work expenses.

The simplified Form 2106-EZ was discontinued after 2018, so all eligible filers must use the full Form 2106.

Key Points to Remember

• Form 2106 allows eligible employees to deduct job-related expenses.
• Only specific taxpayers qualify to file this form, per IRS guidelines.
• The form consists of two sections: Part I for general expenses and reimbursements, and Part II for vehicle-related expenses.

Who Is Eligible to File Form 2106 in 2025?

The IRS permits the following taxpayers to file Form 2106:

• Armed Forces reservists
• Qualified performing artists
• Fee-based state or local government officials
• Employees with impairment-related work expenses

Before 2018, any employee with unreimbursed work expenses could claim deductions using this form, but the TCJA eliminated this option for most taxpayers.

Important Tax Reform Update

Previously, taxpayers could claim unreimbursed job expenses either as above-the-line deductions or as itemized deductions. The 2018 tax reform removed the itemized deduction for these expenses for most employees, narrowing eligibility significantly.

How to Complete Form 2106 for 2025

Form 2106 is divided into two parts:

Part I: Lists all employee business expenses and reimbursements to determine deductible amounts. This includes costs like parking, tolls, transportation fees, and other job-related expenses, along with any reimbursements received.

Part II: Focuses on vehicle expenses. Taxpayers can choose between:

• Standard Mileage Rate: Multiply business miles driven by the IRS mileage rate, which is 70 cents per mile for 2025 (up from 67 cents in 2024). This rate covers fuel, maintenance, and depreciation.
• Actual Expenses: Calculate total vehicle-related costs such as gas, oil, repairs, insurance, registration, and depreciation using IRS tables. Interest on car loans and commuting expenses are not deductible.

Purpose of IRS Form 2106

This form is intended for eligible employees to deduct unreimbursed job expenses including tools, uniforms, education, home office costs, insurance premiums, and professional dues or fees.

What Qualifies as Unreimbursed Job Expenses?

Examples include costs for work tools, job-related education, specialized clothing, insurance, home office expenses, and membership fees for professional organizations.

IRS Standard Deduction Updates for 2025

The standard deduction for single taxpayers in 2025 is $15,000, increased from $14,600 in 2024. For married couples filing jointly, the deduction rises to $30,000 from $29,200 in 2024.

Summary

Form 2106 remains a valuable tax tool for specific employee groups to deduct ordinary and necessary business expenses. While most employees lost this deduction option after 2018, Armed Forces reservists, qualified performing artists, fee-based government officials, and those with impairment-related expenses can still benefit from filing this form to reduce their taxable income.

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