Building Your Business Business Taxes Business Expense Deductions for Employee-Related Costs Deductions for Uniforms, Tools, Equipment, and Publications By Jean Murray Jean Murray Facebook Twitter Jean Murray, MBA, Ph.D., is an experienced business writer and teacher who has been writing for The Balance on U.S. business law and taxes since 2008. She has taught accounting, business law, and business finance at business and professional schools for over 35 years, has authored several books on saving money and simplifying your business, and was the owner of startup-focused company Emence Enterprises, LLC. learn about our editorial policies Updated on September 13, 2022 Fact checked by Yasmin Ghahremani Fact checked by Yasmin Ghahremani Twitter Yasmin Ghahremani has over two decades of journalism experience and is an expert on personal finance topics, including credit cards, insurance, and loans. As an Associate Editorial Director she sets The Balance’s standards for evaluating financial services, which includes assigning, editing, and fact-checking articles. learn about our editorial policies Share Tweet Pin Email In This Article View All In This Article Employee Uniforms Tools and Equipment Business Subscriptions Business Meals (But Not Entertainment) How To Claim These Expenses Where To Show Expenses on Tax Returns Frequently Asked Questions (FAQs) Photo: 10'000 Hours / Getty Images In addition to employee benefits, there are other costs of business relating to your employees that you as a business owner can deduct from your business taxes. In every case, these expenses must be reasonable and necessary costs of doing business. Here are a few typical expenses related to employees that you might have missed as business tax deductions. Key Takeaways You can deduct the cost of work uniforms if they're a necessary business expense and are not clothes that can be worn just anywhere.Tools and equipment can also be deducted, as long as employees can't take the items home with them.You can deduct publications that you subscribe to in order to help employees do their jobs better, such as trade journals.Business meals that you reimburse employees for are 100% deductible for 2021 and 2022.All of these should be filed as business expenses on your tax return. Employee Uniforms Your business may deduct costs for uniforms for yourself and employees if these are reasonable and necessary costs of doing business. For example, if you operate a restaurant, it is reasonable that employees wear a uniform while on duty. Some other examples of deductible uniforms and clothing are hard hats, theatrical dress, and other safety gear. You may not deduct costs for "street clothes" that you or your employees wear to work. For example, suits and general business attire are considered street clothes for both men and women. The "rule of thumb" is that if you can wear it anywhere and everywhere, it is not necessary as a business expense and is thus not deductible. Note For both tax reasons and general cleanliness reasons, you should require employees not to wear uniforms to work and to change out of uniforms before leaving work. Costs to clean and repair uniforms are also deductible business expenses. Tools and Equipment Tools that employees are required to use for work are deductible, as well as required equipment. If you require employees to have specific tools or equipment, for example in a dental office, your business can deduct the cost of those tools. Employees should not be able to take tools or equipment home, for personal use. The 2017 Tax Cuts and Jobs Act removed computer and peripheral equipment (like copiers) from the definition of listed property, but company cars driven by employees are still in this category. Note Listed property is a special type of property that can be used for both business and personal reasons. In order to depreciate the cost of these vehicles on your business tax return, you must carefully document employee use and be able to show that the property is used more than 50% of the time for business purposes. Subscriptions to Business, Trade, and Professional Publications Businesses need well-informed employees who are up to date with the latest trends and technology in their fields. The cost of professional journals, trade publications, and business magazines, and books is well within the limits of "reasonable and necessary" business expenses, but be sure to include only business or professional publications. Business Meals (But Not Entertainment) For the 2021 and 2022 tax years, businesses can deduct 100% of the cost of food and beverages (along with taxes and tips) bought from a restaurant. Otherwise, you can usually only deduct 50% of the cost of the meal. Other business entertainment expenses are no longer deductible, as of 2018. Tickets to events, golf outings, and expenses for activities like fishing or sailing are no longer allowed. How To Claim These Expenses on Your Business Tax Return The most important tax responsibility of business owners, in addition to paying taxes, is to keep good records. You will need to: Keep receipts of all these expenses, including details of the business purpose.Create a business policy and procedure manualthat spells out what your company provides to employees and restrictions such as the use of business-provided equipment or uniforms (like only wearing work uniforms on the job). Where To Show these Expenses on Your Business Tax Return For sole proprietors and single-member LLCs, show these expenses in the "Expenses" section of Schedule C. For partnerships and multiple-member LLCs, show these expenses in the "Deductions" section of Form 1065. For corporations, show these expenses in the "Deductions" section of Form 1120 or Form 1120-s for S corporations. Frequently Asked Questions (FAQs) Can I Require Employees to Pay for Things Like Uniforms and Tools? Some companies require employees to pay the cost of such expenses as breakage, shortages, uniforms, and some tools. The U.S. Department of Labor says that employers may require employees to pay these costs, but the costs may not reduce the employee's wage below the current minimum wage level, nor may the cost cut into overtime compensation. Before you decide to require employees to pay these costs, check with your state department of labor; it may have different (higher) restrictions on requiring employees to pay these costs. Don't Employees Get to Deduct Unreimbursed Expenses? Before 2018, employees were able to deduct unreimbursed business expenses on their personal tax returns, for expenses of over 2% of adjusted gross income. The Tax Cuts and Jobs Act effective beginning with the 2018 tax year, does not allow most employees to deduct unreimbursed employee business expenses on their personal tax returns. These expenses include travel and mileage costs, tools and supplies, required uniforms, and dues and subscriptions. DisclaimerThis article presents general information and is not intended to be tax or legal advice. Consult with your tax preparer before attempting to deduct business expenses. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. U.S. Department of Labor. "Fact Sheet #16: Deductions From Wages for Uniforms and Other Facilities Under the Fair Labor Standards Act (FLSA)." IRS. "Publication 535." Page 5. IRS. "New Rules and Limitations for Depreciation and Expensing Under the Tax Cuts and Jobs Act." IRS. "Instructions for Form 4562 – Depreciation and Amortization (Including Information on Listed Property." Page 6. IRS. "Instructions for Form 2106." IRS. "Here's What Businesses Need To Know About the Enhanced Business Meal Deduction." IRS. "IRS Issues Final Regulations on the Deduction for Meals and Entertainment." U.S. Department of Labor. "Fact Sheet #16: Deductions From Wages for Uniforms and Other Facilities Under the Fair Labor Standards Act (FLSA)." IRS. "Publication 529 (12/2020), Miscellaneous Deductions."