§ 67 2-percent floor on miscellaneous itemized deductions
(a) General rule
In the case of an individual, the miscellaneous itemized deductions for any taxable year shall be allowed only to the extent that the aggregate of such deductions exceeds 2 percent of adjusted gross income.
(b) Miscellaneous itemized deductions
For purposes of this section, the term “miscellaneous itemized deductions” means the itemized deductions other than—
(1) the deduction under section (relating to interest),
(2) the deduction under section (relating to taxes),
(3) the deduction under section for casualty or theft losses described in paragraph (2) or (3) of section or for losses described in section ,
(4) the deductions under section (relating to charitable, etc., contributions and gifts) and section (relating to deduction for amounts paid or permanently set aside for a charitable purpose),
(5) the deduction under section (relating to medical, dental, etc., expenses),
(6) any deduction allowable for impairment-related work expenses,
(7) the deduction under section (relating to deduction for estate tax in case of income in respect of the decedent),
(8) any deduction allowable in connection with personal property used in a short sale,
(9) the deduction under section (relating to computation of tax where taxpayer restores substantial amount held under claim of right),
(10) the deduction under section (relating to deduction where annuity payments cease before investment recovered),
(11) the deduction under section (relating to deduction for amortizable bond premium),
(12) the deduction under section (relating to deductions in connection with cooperative housing corporations), and
(13) the deductions allowed by section for educator expenses (as defined in subsection (g)).
(c) Disallowance of indirect deduction through pass-thru entity
(1) In general
The Secretary shall prescribe regulations which prohibit the indirect deduction through pass-thru entities of amounts which are not allowable as a deduction if paid or incurred directly by an individual and which contain such reporting requirements as may be necessary to carry out the purposes of this subsection.
(2) Treatment of publicly offered regulated investment companies
(A) In general
Paragraph (1) shall not apply with respect to any publicly offered regulated investment company.
(B) Publicly offered regulated investment companies
For purposes of this subsection—
(i) In general
The term “publicly offered regulated investment company” means a regulated investment company the shares of which are—
(I) continuously offered pursuant to a public offering (within the meaning of section 4 of the Securities Act of 1933, as amended (15 U.S.C. 77a to 77aa)),
(II) regularly traded on an established securities market, or
(III) held by or for no fewer than 500 persons at all times during the taxable year.
(ii) Secretary may reduce 500 person requirement
The Secretary may by regulation decrease the minimum shareholder requirement of clause (i)(III) in the case of regulated investment companies which experience a loss of shareholders through net redemptions of their shares.
(d) Impairment-related work expenses
For purposes of this section, the term “impairment-related work expenses” means expenses—
(1) of a handicapped individual (as defined in section ) for attendant care services at the individual’s place of employment and other expenses in connection with such place of employment which are necessary for such individual to be able to work, and
(2) with respect to which a deduction is allowable under section (determined without regard to this section).
(e) Determination of adjusted gross income in case of estates and trusts
For purposes of this section, the adjusted gross income of an estate or trust shall be computed in the same manner as in the case of an individual, except that—
(1) the deductions for costs which are paid or incurred in connection with the administration of the estate or trust and which would not have been incurred if the property were not held in such trust or estate, and
(2) the deductions allowable under sections , , and ,
shall be treated as allowable in arriving at adjusted gross income. Under regulations, appropriate adjustments shall be made in the application of part I of subchapter J of this chapter to take into account the provisions of this section.
(f) Coordination with other limitation
This section shall be applied before the application of the dollar limitation of the second sentence of section (relating to trade or business expenses).
(g) Educator expenses
For purposes of subsection (b)(13), the term “educator expenses” means expenses of a type which would be described in section if—
(1) such section were applied—
(A) without regard to the dollar limitation,
(B) without regard to “(other than nonathletic supplies for courses of instruction in health or physical education)” in clause (ii) thereof, and
(C) by substituting “as part of instructional activity” for “in the classroom” in clause (ii) thereof, and
(2) section were applied by inserting “, interscholastic sports administrator or coach,” after “counselor”
(h) Suspension for taxable years beginning after 2017
Notwithstanding subsection (a), no miscellaneous itemized deduction shall be allowed for any taxable year beginning after December 31, 2017.
(Added Pub. L. 99–514, title I, § 132(a), Oct. 22, 1986, 100 Stat. 2113; amended Pub. L. 100–647, title I, § 1001(f), title IV, § 4011(a), Nov. 10, 1988, 102 Stat. 3351, 3655; Pub. L. 101–239, title VII, § 7814(f), Dec. 19, 1989, 103 Stat. 2414; Pub. L. 103–66, title XIII, § 13213(c)(2), Aug. 10, 1993, 107 Stat. 474; Pub. L. 105–277, div. J, title IV, § 4004(b)(1), Oct. 21, 1998, 112 Stat. 2681–910; Pub. L. 106–554, § 1(a)(7) [title III, § 319(2)], Dec. 21, 2000, 114 Stat. 2763, 2763A–646; Pub. L. 115–97, title I, § 11045(a), Dec. 22, 2017, 131 Stat. 2088; Pub. L. 119–21, title VII, § 70110(a), (b), July 4, 2025, 139 Stat. 164.)
Operative text only. Editorial notes, amendment history, and effective dates: official OLRC text of § 67