Bill Overview
Title: Employee Business Expense Deduction Reinstatement Act of 2022
Description: This bill allows an individual taxpayer to take into account 85% of any miscellaneous itemized deductions for the taxable year that are unreimbursed expenses paid or incurred by the individual in connection with the performance of services as an employee.
Sponsors: Rep. Grothman, Glenn [R-WI-6]
Target Audience
Population: Employees with unreimbursed business expenses
Estimated Size: 15000000
- The bill affects individual taxpayers who have unreimbursed employee business expenses.
- It applies to expenses that are considered miscellaneous itemized deductions.
- The reinstatement allows them to deduct 85% of eligible unreimbursed business expenses on their tax returns.
- Employees across various sectors who incur work-related expenses that are not reimbursed by employers will be impacted.
Reasoning
- The target population for the policy includes employees who incur unreimbursed business expenses, such as travel, tools, or supplies necessary for their job.
- Individuals who are able to itemize deductions on their tax returns are more likely to benefit from this policy.
- The policy would potentially improve financial wellbeing by reducing taxable income, especially for individuals with significant work-related expenses.
- The reinstatement may only have a low to medium impact on those with minor expenses while highly benefiting those with extensive unreimbursed work costs.
Simulated Interviews
Sales Representative (New York, NY)
Age: 45 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 3/20
Statement of Opinion:
- The policy would finally allow me to get some relief on all the travel and client meeting expenses I incur myself.
- It should have been reinstated a long time ago because these are genuine costs of doing my job.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Tech Consultant (Austin, TX)
Age: 32 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- It will help significantly reduce my annual taxes, especially with the expensive software I have to buy.
- Contractors like me often have mismatched benefits compared to full-time employees.
- I need this deduction to balance the costs.'],'impactOfPolicy':'medium','duration':10,'cantrilWellbeingAfterPolicy':{'year1':7,'year2':7,'year3':7,'year5':7,'year10':6,'year20':6},'cantrilWellbeingNoPolicy':{'year1':6,'year2':6,'year3':6,'year5':6,'year10':6,'year20':6},'commonness':2},{
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
High School Teacher (Chicago, IL)
Age: 47 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 4/20
Statement of Opinion:
- While I love to support my classroom, often the expenses come from my own pocket.
- It would help to have some compensation for these costs through tax deductions.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Software Developer (San Francisco, CA)
Age: 29 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- I doubt it would impact me much since I generally go for the standard deduction.
- Maybe if I decided to itemize, it could be beneficial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Nurse Practitioner (Miami, FL)
Age: 55 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 2/20
Statement of Opinion:
- Every bit helps when it comes to out-of-pocket costs for essential work items.
- Even 85% deduction means some help, so I welcome it.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Freelance Writer (Phoenix, AZ)
Age: 62 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 15.0 years
Commonness: 1/20
Statement of Opinion:
- This policy is much needed for freelancers who often have unpredictable costs.
- The reinstatement encourages tackling larger projects.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 7 | 4 |
| Year 5 | 7 | 4 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Environmental Consultant (Portland, OR)
Age: 39 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 2/20
Statement of Opinion:
- Every deduction helps when you're racking up costs on gear and transport.
- I'm glad this policy is being reinstated.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Photographer (Denver, CO)
Age: 51 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 20.0 years
Commonness: 1/20
Statement of Opinion:
- It will be great to have some relief on lodging or travel costs when attending events.
- I'd been hoping for something to cover these charges.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 8 | 5 |
| Year 10 | 9 | 6 |
| Year 20 | 9 | 6 |
Journalist (Boston, MA)
Age: 23 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- Early on, any deduction is welcome, but I don't see massive personal impact currently.
- Maybe in future years as my job becomes more demanding.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Cost Estimates
Year 1: $2100000000 (Low: $1800000000, High: $2500000000)
Year 2: $2100000000 (Low: $1800000000, High: $2500000000)
Year 3: $2100000000 (Low: $1800000000, High: $2500000000)
Year 5: $2100000000 (Low: $1800000000, High: $2500000000)
Year 10: $2100000000 (Low: $1800000000, High: $2500000000)
Year 100: $2100000000 (Low: $1800000000, High: $2500000000)
Key Considerations
- Reinstating this deduction may benefit employees who incur significant unreimbursed business expenses and currently do not receive any tax relief.
- The bill may encourage more taxpayers to itemize deductions, reversing a trend set in motion by the TCJA.
- It could provide financial relief to workers in sectors where unreimbursed expenses are common.