How do miscellaneous itemized deductions and their AGI thresholds apply for 2025 tax returns?
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Executive summary
For tax year 2025, “miscellaneous” itemized deductions that were once deductible only to the extent they exceeded 2% of AGI have been removed from the federal individual income tax code — the TCJA suspension was made permanent by the One Big Beautiful Bill Act (OBBBA) in 2025, so those categories (unreimbursed employee expenses, tax-prep fees, investment fees, etc.) are no longer deductible for returns filed for 2025 [1] [2] [3]. Other itemized deductions remain (medical expenses above 7.5% of AGI, charitable contributions, mortgage interest within limits, and a modified SALT cap through 2025), and several itemized deductions and the standard deduction amounts were adjusted for 2025 [1] [4] [5].
1. What “miscellaneous” itemized deductions means now: permanent removal and what that covers
For decades some expenses were grouped as “miscellaneous itemized deductions” deductible only to the extent they exceeded 2% of adjusted gross income; those included unreimbursed employee business expenses, tax-preparation fees, and investment-management fees. The Tax Cuts and Jobs Act (TCJA) suspended those deductions through 2025, and reporting indicates that the OBBBA made that suspension permanent beginning with tax year 2025 — effectively eliminating the category for returns filed in early 2026 [1] [2] [3].
2. How AGI thresholds still matter — but not for miscellaneous 2% deductions
Adjusted gross income (AGI) remains central to many tax rules: it determines whether medical expenses exceed the 7.5% floor, when other credits phase out, and how certain new or temporary 2025 deductions phase out by income [6] [7] [8]. But the specific 2%-of-AGI test that once governed miscellaneous deductions is not available for 2025 because the miscellaneous category has been disallowed [1] [3].
3. What itemizers can still deduct and AGI-based floors that remain
Several familiar itemized deductions remain for 2025. Medical and dental expenses are deductible only to the extent they exceed 7.5% of AGI [4] [2]. Mortgage interest and charitable contributions remain subject to existing dollar and percentage limits. State and local tax (SALT) deductions were altered for 2025 (temporary cap changes and income-based phaseouts are reported), and other deductions retain income-related phaseouts or thresholds [4] [7] [1].
4. The SALT cap, standard deduction and income phaseouts — the practical trade-offs
Retail and policy coverage shows the SALT cap and standard deduction changed for 2025: standard deduction increases were announced and SALT treatment was temporarily modified (including a reported cap adjustment to $40,000 for 2025 and reported phaseout rules tied to AGI above $500,000 in some summaries) — taxpayers should compare itemizing to taking the standard deduction because the TCJA-era increases to the standard deduction greatly reduced the number who itemize [4] [5] [1]. Sources describe income‑based phaseouts for some deductions [4] [7].
5. New or temporary 2025 provisions and their income thresholds
Reporting from some practitioner and planning outlets notes OBBBA added or modified temporary deductions for 2025–2028 (for example, new temporary deductions and phaseout thresholds for certain items such as auto loan interest and overtime-related deductions are mentioned) and that those changes include MAGI thresholds for phaseouts [8]. Available sources do not give a single comprehensive table of every threshold; taxpayers should consult the IRS and professional advisers for the precise MAGI cutoffs that apply to any new OBBBA items [8].
6. Where the disagreements or uncertainties lie
Congressional and policy summaries affirm the 2% miscellaneous deduction suspension through 2025 and report the OBBBA made significant changes, but secondary sources differ on some details — for example, not all outlets list the same SALT cap or the exact phaseout mechanics, and some guidance reiterates the TCJA suspension instead of the OBBBA permanence language [1] [4] [3]. That divergence suggests readers should check primary IRS guidance and Revenue Procedures cited by lawmakers and the IRS for the final numeric thresholds used on 2025 returns [1] [5].
7. Practical takeaway for taxpayers preparing 2025 returns
Do not budget to claim “miscellaneous” itemized deductions based on a 2%‑of‑AGI floor for 2025 returns; they were removed and not available to reduce taxable income for 2025 [1] [3]. Continue to track medical expense totals vs. 7.5% of AGI, mortgage interest, charitable gifts and state/local taxes (mind SALT cap rules and any income phaseouts), and consult IRS publications and the 2025 Revenue Procedure for inflation‑adjusted thresholds when you prepare returns [2] [6] [5].
Limitations: this summary relies on the provided reporting and briefing materials; it does not substitute for IRS instructions or advice from a tax professional, and available sources do not include an exhaustive IRS table of every 2025 phaseout threshold in one place [8] [6].