Are Union Dues Tax Deductible?

Navigating tax deductions can be tricky, especially for public employees. One question that often pops up is whether union dues are deductible. Getting a handle on the current tax laws and how they affect union dues is key to making smart decisions when it comes time to file your taxes.

In this article, we’ll break down what you need to know about union dues and tax deductions. We’ll cover the basics of federal and state tax rules, with a special focus on teacher union dues. Our goal is to help you understand the current laws and prepare for any potential changes, so you can manage your tax obligations more confidently.

Tax Treatment of Union Dues

Prior to the Tax Cuts and Jobs Act (TCJA) of 2017, union dues were considered an unreimbursed employee expense and were deductible as a miscellaneous itemized deduction. However, this changed with the TCJA, which suspended miscellaneous itemized deductions for tax years 2018 through 2025.

For many public employees, including teachers, this change had major financial implications. Previously, being able to deduct union dues provided some relief at tax time. Without this deduction, you may feel an increased financial burden to stretch your paycheck even further.

While union dues are not deductible under current federal law, teachers can still claim other deductions or credits. For instance, eligible educators can deduct up to $250 of unreimbursed expenses for classroom supplies under the Educator Expense Deduction. It’s also important to note that some state tax laws may allow deductions for union dues even if federal law does not.

State-Specific Tax Laws

Several states have their own provisions for the deduction of union dues. For example, in New York, union dues are deductible on state income tax returns, even though they are not deductible on federal returns. This provides some relief for public employees who are members of unions within the state.

Similarly, California allows for the deduction of union dues on state tax returns. According to the California Franchise Tax Board, union dues are considered a deductible expense, providing a benefit to union members who may feel the pinch from the lack of federal deductibility.

These state-specific provisions highlight the importance of understanding the tax laws applicable in your state. Consult with a tax professional or refer to your state’s tax guidelines to determine if you can benefit from these deductions.

Future Outlook and Potential Changes

The current suspension of the deduction for union dues is set to expire at the end of 2025, so there is potential for change in the near future. However, given the political climate, it’s challenging to predict whether the deductibility of union dues will return. Some lawmakers want to reinstate the tax deduction for union dues while others support the continuation of the current law.

If the deductibility of union dues is reinstated after 2025, it would allow union members to reduce their taxable income and potentially lower their tax liability. However, until such changes occur, public employees should focus on other available tax benefits and deductions. Talking  with a tax professional to identify potential savings for your unique tax situation is a great place to start.

The Bottom Line

With the current federal tax law set to expire at the end of next year, it’s possible that we could see changes to how union dues are treated on federal tax returns. In the meantime, it’s important to keep an eye out for legislative developments so you can better manage your tax planning and financial strategy. If you have questions, consider working with a tax professional to ensure you’re making the most informed decisions about your situation.