The 2025 update to the Tax Cuts and Jobs Act (TCJA)—passed as part of the One Big Beautiful Act—brings significant and permanent changes to the U.S. tax code. Three major areas are impacted:
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Miscellaneous itemized deductions are permanently eliminated
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Moving expenses deduction is gone (with limited exceptions)
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Gambling loss deductions face new, stricter limits
While some taxpayers may see little change, others—particularly those who previously relied on these deductions—will need to rethink their tax strategies. This guide breaks down each change, who is most affected, and practical steps to adapt.
1. Elimination of Miscellaneous Itemized Deductions
What’s Changing
Miscellaneous itemized deductions, subject to the old 2% adjusted gross income (AGI) floor, are now permanently eliminated. This means certain expenses can no longer be deducted, regardless of amount.
Previously deductible expenses now gone include:
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Unreimbursed employee expenses (e.g., tools, uniforms, job travel not reimbursed by employer)
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Tax preparation fees
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Investment fees and expenses
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Club and union dues
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Hobby expenses (up to hobby income)
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Safety deposit box rental fees
Real-Life Example – Sales Rep
Before: Maria, a traveling sales representative, spent $3,500 annually on work-related travel, uniforms, and tools her company did not reimburse. In past years, she itemized and deducted these under the miscellaneous category, reducing her taxable income.
Now: These expenses are no longer deductible—meaning Maria’s taxable income increases by $3,500, potentially raising her tax bill by hundreds of dollars.
Who This Impacts Most
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Employees with significant unreimbursed job expenses
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Active investors with large advisory or broker fees
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Union members paying dues out-of-pocket
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Taxpayers with professional memberships or club fees
Planning Tip
Where possible, negotiate with your employer for expense reimbursement or seek ways to shift costs to the business rather than incurring them personally.
2. Elimination of Moving Expense Deduction
What’s Changing
The moving expenses deduction, previously available to taxpayers who relocated for work, is now permanently eliminated for most people.
Exception:
The deduction remains for:
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Members of the U.S. Armed Forces on active duty who move due to military orders
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Members of the U.S. intelligence community who move due to reassignment
Real-Life Example – Civilian Relocation
Before: Jason moved from Arizona to California for a new job and spent $7,000 on moving costs. In prior years, he could deduct these expenses, reducing taxable income.
Now: Unless Jason is active-duty military or in the intelligence community, he can no longer claim these costs.
Who This Impacts Most
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Civilian workers relocating for jobs without employer reimbursement
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New graduates moving to a different state for work
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Employees transitioning between states with high relocation costs
Planning Tip
Before accepting a job that requires relocation, negotiate moving cost reimbursement from your new employer. This can be a tax-free benefit if structured correctly.
3. Stricter Limits on Gambling Loss Deductions
What’s Changing
Under previous rules, gambling losses could be deducted up to the amount of gambling winnings. The new law makes this rule permanent and further limits the deduction to 90% of the amount of such losses.
This means that even if you have equal losses and winnings, you can no longer fully offset your gambling income.
Example:
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Winnings: $10,000
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Losses: $10,000
Old Rule: Deduct the full $10,000 in losses → $0 net gambling income.
New Rule: Deduct only 90% of losses ($9,000) → $1,000 taxable gambling income remains.
Real-Life Example – Poker Player
Before: Lisa played in tournaments with $50,000 in winnings and $50,000 in entry fees/losses. She could deduct the full $50,000, making her net gambling income $0.
Now: She can deduct only $45,000, leaving $5,000 in taxable income—potentially adding over $1,000 to her tax bill.
Who This Impacts Most
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Professional gamblers
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Recreational gamblers with large winnings/losses
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Individuals participating in poker tournaments or sports betting
Planning Tip
Keep meticulous records of all gambling winnings and losses, and be aware of the 90% cap when calculating taxable income.
Who Benefits and Who Loses from These Changes
Beneficiaries
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Taxpayers with simple returns who take the standard deduction (fewer categories to track)
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The IRS, due to reduced audit complexity and fewer deduction disputes
Those Who Lose Out
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Employees with high unreimbursed expenses
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Civilian workers who relocate for jobs
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High-stakes gamblers or frequent casino visitors
Frequently Asked Questions (FAQ)
Q1: Are professional expenses now never deductible?
A: For employees, yes—unreimbursed work expenses are no longer deductible. Self-employed individuals can still deduct qualifying business expenses.
Q2: Can I still deduct investment advisory fees?
A: No, these are eliminated under the miscellaneous itemized deduction category.
Q3: What if my employer reimburses moving expenses?
A: If structured as a qualified reimbursement, it may not be taxable to you. Always confirm with your employer and CPA.
Q4: Do I have to report gambling winnings if I also had losses?
A: Yes, all gambling winnings must be reported, even if you had equal or greater losses.
Q5: How can I legally reduce gambling tax impact?
A: Limit gambling activity to a level where the 90% loss cap still offsets most winnings, or focus on lower-frequency, higher-win events to maximize offset potential.
Bottom Line
The 2025 TCJA updates simplify tax filings for many but remove valuable deductions for others. If you’ve historically benefited from miscellaneous itemized deductions, moving expense deductions, or full gambling loss offsets, it’s time to reassess your tax strategy.
With the right planning, you can minimize the impact and adapt to the new rules.
Get Professional Guidance Before Tax Season
At Find a Good Accountant (FAGA), we help clients in Palm Desert and beyond adapt to new tax laws—making sure you keep more of what you earn.
📞 Call today: 760-423-6226
📍 Visit us: 74333 Highway 111 Suite 103, Palm Desert, CA 92260
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