Corrected: OBBBA Moving Educator's Deduction Below-the-Line is Below The Belt

OBBBA is an insult to educators across the country

Important Note: I got this wrong, the above-the-line deduction is NOT going away. Here is the corrected blog post on the topic. I’m going to leave the original blog post up with some edits to point out where I was wrong and link to the new post. I don’t want to take this post down out of respect for transparency (I sometimes get it wrong and need to correct the record).

2025 is the last year that educators will be able to deduct classroom expenses without having to itemize. (update: this is not true - see updated blog post: Deduction Confusion).

In 2002 the Job Creation and Worker Assistance Act allowed educators to deduct up to $250 annually in classroom expenses without having to itemize deductions for the years of 2022 and 2023. Through a series of bills passed over the years the amount was indexed for inflation and made permanent. It’s $300 for 2025.

While not a huge deduction, it’s not nothing. Since the overwhelming majority of people do not itemize, it’s the only way for most educators to get a little bit of relief for the classroom supplies they purchase with their own money.

Even that small deduction is being stripped away for most educators due to the awful budget bill passed this year referred to as OBBBA. (edit: It’s not going away, see note above).

Educators can take the deduction in 2025 for the last time.

In 2026 the educator deduction changes in two ways.

First, instead of being an above-the-line (meaning you don’t have to itemize) it becomes an itemized deduction. In other words, only educators who itemize can take the deduction. (edit: It’s not going as an above-the-line deduction, it will remain and a new itemized deduction is being added)

While more people will itemize with the passage of OBBBA, it will still be a small number, which means most educators will lose the deduction. The only good news is that for educators who are able to itemize, the $300 cap goes away.

Scott Dauenhauer, CFP, MPAS