IRS Form 2106 – Employee Business Expenses

IRS Form 2106 – Employee Business Expenses – IRS Form 2106, officially titled “Employee Business Expenses,” helps specific employees calculate and deduct unreimbursed ordinary and necessary job-related costs. Most W-2 employees can no longer claim these deductions due to changes from the Tax Cuts and Jobs Act (TCJA) and subsequent legislation, but certain groups still qualify.

This guide covers who can file Form 2106 for tax year 2025 (returns filed in 2026), what expenses qualify, how to complete the form, key 2025 updates like the standard mileage rate, recordkeeping rules, and reporting instructions. Download the official 2025 Form 2106 PDF directly from the IRS here: https://www.irs.gov/pub/irs-pdf/f2106.pdf. Always pair it with the latest instructions at IRS.gov/Form2106.

Who Can File IRS Form 2106 in 2025?

Form 2106 is restricted to four categories of taxpayers. Most employees cannot use it because miscellaneous itemized deductions subject to the 2% of AGI floor remain suspended (and have been made permanent in key aspects by later legislation like the One Big Beautiful Bill Act).

You qualify if you are:

  • Armed Forces reservist — A member of a reserve component (e.g., Army Reserve, National Guard, Coast Guard Reserve, Public Health Service Reserve) claiming travel expenses more than 100 miles from home for reserve duties.
  • Qualified performing artist — You performed services in the performing arts as an employee for at least two employers, earned at least $200 from each, had performing-arts-related expenses exceeding 10% of your performing-arts gross income, and your adjusted gross income (AGI) is $16,000 or less (special rules for married filing jointly and living apart).
  • Fee-basis state or local government official — Paid on a fee basis (wholly or partly) by a state or local government, not a salary.
  • Employee with impairment-related work expenses — Someone with a physical or mental disability who incurs expenses for attendant care or other aids necessary to work (e.g., specialized equipment or services at the workplace).

Use the IRS flowchart in the instructions to confirm eligibility. If you don’t fit these categories, you generally cannot deduct unreimbursed employee business expenses.

Note: Eligible educators use a separate above-the-line deduction (up to $300, potentially expanding later) and do not file Form 2106 for those expenses.

What Expenses Qualify as Deductible on Form 2106?

Deductible expenses must be ordinary (common and accepted in your occupation) and necessary (helpful and appropriate for your job). They must be unreimbursed or exceed employer reimbursements not included in your W-2 Box 1 wages.

Common qualifying expenses include:

  • Vehicle expenses — Business use of your personal car (not commuting). Choose standard mileage rate or actual expenses.
  • Travel expenses — Lodging, airfare, car rental, and transportation while away from your tax home overnight (meals handled separately).
  • Meals — 50% of business meals or meals while traveling away from home. Use the standard meal allowance (federal per diem rates) as an option.
  • Other business expenses — Tools, supplies, uniforms (not suitable for everyday wear), professional dues, education, trade publications, and business gifts (with limits).

Non-deductible items (post-TCJA rules):

  • Commuting between home and work
  • Entertainment (e.g., tickets to events)
  • Club dues or membership fees for recreational facilities
  • Personal expenses

Keep detailed records to substantiate all claims.

How to Fill Out IRS Form 2106: Step-by-Step?

Form 2106 has two main parts. Attach it to your Form 1040, 1040-SR, or 1040-NR.

Part I: Employee Business Expenses and Reimbursements

  1. Step 1 (Lines 1–6) — List your expenses.
    • Line 1: Vehicle expenses (from Part II).
    • Line 2: Parking fees, tolls, local transportation (non-commuting).
    • Line 3: Overnight travel (excluding meals).
    • Line 4: Other expenses (e.g., gifts, education, depreciation from Form 4562).
    • Line 5: Meals (enter full amount; 50% limit applied later).
    • Line 6: Total expenses.
  2. Step 2 (Line 7) — Enter reimbursements from your employer (only those not included in W-2 Box 1 wages, such as amounts in Box 12 with code L).
  3. Step 3 (Lines 8–10) — Calculate deductible amount.
    • Subtract reimbursements from total expenses.
    • Apply the 50% limit to meals.
    • Carry the total to the appropriate line on your return (see reporting section below).

If expenses do not exceed reimbursements, you may owe income on excess amounts in some cases.

Part II: Vehicle Expenses

Complete this if claiming car expenses.

  • Section A: General information (date placed in service, total miles, business miles, commuting miles, business use percentage).
  • Section B (Standard Mileage Rate): Multiply business miles by the 2025 rate of 70 cents per mile. Available if you use this method in the first year the vehicle is placed in service for business (or for leased vehicles).
  • Section C (Actual Expenses): Gas, oil, repairs, insurance, depreciation, etc. Prorate by business use percentage.
  • Section D: Depreciation details, including Section 179 and bonus depreciation limits.

Tip: Calculate both standard mileage and actual expenses to choose the larger deduction (but you must use the same method consistently in future years for owned vehicles; straight-line depreciation required if switching from standard mileage).

Depreciation limits for passenger automobiles placed in service in 2025 apply (higher limits if bonus depreciation qualifies). SUV Section 179 limit is $31,300 for 2025. Consult Form 4562 for complex depreciation.

2025 Key Updates and Limits

  • Standard mileage rate: 70 cents per mile for business use.
  • Section 179 deduction limit: $2,500,000 (phase-out starts at $4,000,000 in qualified property).
  • Meals: Still limited to 50%.
  • Depreciation caps for vehicles: Vary based on whether bonus depreciation applies (e.g., up to $20,200 first year with bonus in many cases).

Recordkeeping Requirements

The IRS requires strong documentation:

  • Receipts for lodging (any amount) and other expenses of $75 or more.
  • Mileage logs (date, miles, business purpose).
  • For travel: Time, place, business purpose.
  • Contemporaneous records are best.

The standard meal allowance can simplify meal tracking, but you must still prove the travel occurred.

Where to Report the Deduction from Form 2106?

  • Armed Forces reservists, qualified performing artists, and fee-basis officials: Enter the total from Line 10 on Schedule 1 (Form 1040), line 12 (above-the-line deduction — available even if you take the standard deduction).
  • Employees with impairment-related work expenses: Report on Schedule A (Form 1040), line 16 (itemized deduction).

Attach Form 2106 to your return.

Tips and Common Mistakes to Avoid

  • Double-check eligibility — most taxpayers cannot file Form 2106.
  • Allocate reimbursements properly if they cover mixed expenses.
  • Do not deduct commuting or personal-use portions of vehicle expenses.
  • Track business use percentage accurately for actual expenses.
  • Qualified performing artists must meet strict AGI and employment tests.

Tax software often guides you through Form 2106, or a tax professional can help maximize your deduction while staying compliant.

Download and Next Steps

Access the latest Form 2106 and instructions at IRS.gov. The direct PDF link provided is: https://www.irs.gov/pub/irs-pdf/f2106.pdf.

Tax laws can change, and individual situations vary. For personalized advice, consult a qualified tax professional or use IRS resources like Publication 463 (Travel, Gift, and Car Expenses) and Publication 529 (Miscellaneous Deductions).

Filing correctly with Form 2106 can provide valuable tax relief for those who qualify. Stay informed and keep excellent records to support your claims.

This article is for informational purposes only and is not tax advice. Rules are based on 2025 IRS forms and publications as of early 2026.