IRS increases what teachers can deduct for classroom expenses

As the school year begins, the IRS is telling educators that they can deduct up to $300 of out-of-pocket classroom expenses, the first increase in two decades.

The special educator expense deduction increase is the first since it was enacted in 2002 with a $250 annual limit, and the IRS said in a release this month it will continue to rise in $50 increments to adjust for inflation.

Any kindergarten through grade 12 teacher, instructor, principal or aide at a public or private school is eligible.

Educators can still claim the savings when they purchase classroom expenses if they take the standard deduction. The increase applies to expenses incurred beginning this year, meaning educators can claim the deduction when they file their returns next year.

The deduction can apply to a range of items used in classrooms, including books, supplies, equipment, software, face masks and other COVID-19 protective items. The cost of home schooling or nonathletic supplies in health and physical education courses will not be covered.

Educators can also deduct the costs they incur for professional development courses related to their curriculum.

“But the IRS cautions that, for these expenses, it may be more beneficial to claim another educational tax benefit, especially the lifetime learning credit,” the agency said in the release.

The increased savings for educators comes as the country faces annual inflation rates that have only recently begun to ease after hitting a roughly 40-year high. 

But annual price gains remained elevated at 8.5 percent in July, driven by falling gas prices in recent days. Core inflation, which excludes the volatile categories of food and energy, remained flat at 5.9 percent in July.

“Fully fundings our schools means fully funding school supplies,” the National Education Association tweeted earlier this month. “Teachers should not have to pay out of pocket for paper, books, pencils and everything else students need to learn.”