The educator expense deduction sat untouched for a decade. Between July 2025 and September 2026, Congress changed it twice: first by adding an uncapped itemized deduction alongside the familiar above-the-line amount, then by extending both to early childhood educators. For tax year 2026 returns, practitioners need to know where to deduct expenses based on job position and expense type.
The Above-the-Line Deduction Before the OB3 Act
Through tax year 2025, the educator deduction was a single, above-the-line deduction under §62(a)(2)(D). Congress enacted it as a temporary provision in 2002 and renewed it as an extender until the PATH Act (P.L. 114-113) made it permanent, indexed it for inflation, and added professional development courses.
The maximum deduction was $250 through tax year 2021, $300 for tax years 2022 through 2025, and is $350 for tax year 2026 under Rev. Proc. 2025-32. The cap is per educator, so two eligible educators filing a joint return can each take the full amount, up to $700 for tax year 2026.
An eligible educator for purposes of the above-the-line deduction includes a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who works at least 900 hours in a school during a school year.
Allowed expenses include books, supplies, computer equipment (including software and services), other equipment, and supplementary materials used in the classroom, plus professional development courses related to the curriculum or the students taught. Supplies for health or physical education courses are allowed only if they are athletic supplies.
Pre-2018, expenses exceeding the maximum could be deducted as unreimbursed employee expenses subject to the 2% of adjusted gross income (AGI) floor.
OB3 Act Creates a Second Educator Deduction
Starting in tax year 2026, educator expenses are also an itemized deduction with no dollar limit. §70110 of the OB3 Act made the suspension of miscellaneous itemized deductions subject to the 2% of AGI floor permanent in §67(h), but carved out educator expenses in new §67(b)(13).
New §67(g) defines the scope of the new itemized deduction as being the same expenses eligible for the above-the-line deduction with four modifications:
The dollar limit does not apply,
Nonathletic health and physical education supplies are allowed,
Outside the classroom expenses used as part of instructional activity qualify, and
Eligible educators include interscholastic sports administrators or coaches.
For example, a coach who is not also a teacher, counselor, principal, or aide qualifies for the itemized deduction, but not the above-the-line deduction. Supplies used outside the classroom (e.g., on the field, in the gym, or on a trip) qualify for the itemized deduction but not the above-the-line deduction.
Early Childhood Educators Now Eligible
Starting in tax year 2026, early childhood educators are eligible for both deductions. This change was a rider attached to the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 (H.R. 5334, signed September 18, 2026).
There were two changes to the statute to enable early educator eligibility:
An eligible educator includes "an early childhood… teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during a school year” under revised §62(d)(1)(A).
The term school now includes “in the case of early childhood education, any school or childcare facility which provides educational or childcare services for more than 2 individuals (other than individuals who reside at the school or facility) who have not attained age 6, and operates at the public expense or receives a fee, payment, or grant for providing such services for any of the individuals (regardless of whether such school or facility is operated for profit)” under revised §62(d)(1)(B)(i).
Tom’s Tax Toolbox Addition
I created an Educator Expenses Worksheet to gather all the right information you need from the client to determine which expenses qualify for which deduction.