Have you ever wondered if those union dues you pay every month could save you money at tax time? With tax laws constantly changing, it’s easy to feel uncertain about what’s deductible and what isn’t. Union dues are an essential expense for many workers, funding everything from collective bargaining to legal representation—but can they lighten your tax burden? 

In this guide, we’ll cut through the confusion and give you a clear understanding of the tax rules surrounding union dues. Whether you’re an employee, self-employed, or curious about future changes, we’ve got the answers you need to make the most of your money.

What Are Union Dues?

Union dues are regular payments made by members to their labor unions, supporting a variety of essential services. These dues typically cover costs like collective bargaining, legal representation, training programs, and other activities designed to improve working conditions and protect workers' rights.

For union members, these payments are an investment in job security, better benefits, and a stronger voice in the workplace. However, when tax season arrives, many people ask whether they can recoup some of these costs through tax deductions. The answer depends on your employment status, where you live, and the current tax laws.

Historical Tax Deductibility of Union Dues

Before the Tax Cuts and Jobs Act (TCJA)

Before the Tax Cuts and Jobs Act (TCJA) of 2017, union dues were generally deductible on federal tax returns as a miscellaneous itemized expense. Taxpayers who itemized their deductions could claim these costs if their total miscellaneous expenses exceeded 2% of their adjusted gross income (AGI).

This provided financial relief for many workers, allowing them to offset a portion of their union dues and other work-related expenses.

After the TCJA

The YCJA introduced sweeping changes to the tax code, one of which was the suspension of miscellaneous itemized deductions, including union dues. From 2018 through 2025, union dues are no longer deductible for employees on federal tax returns. 

This change has left many workers wondering if they have any options left for claiming union-related expenses.

Current Tax Rules for Union Dues

Federal Tax Treatment

Under current federal tax laws, employees cannot deduct union dues during the suspension period established by the TCJA. This means that even if you itemize deductions on your federal return, union dues won’t reduce your taxable income.

Exception for Self-Employed Individuals

For self-employed individuals, the rules are different. Union dues can still be deducted as a business expense. If you're self-employed and pay union dues, you can include them on Schedule C, reducing your taxable income and potentially saving money on your tax bill.

Example: If you’re a freelance actor or writer in a unionized field, these payments may be a valuable deduction for your business.

State-Specific Tax Rules

Even though union dues aren’t currently deductible at the federal level for employees, some states allow these deductions on state tax returns.

States That Allow Deductions

  • New York: Union dues are deductible on state income tax returns, offering relief to many unionized workers.
  • California: Similar to New York, California permits deductions for union dues under specific guidelines.

How to Navigate State Deductions?

Tax rules vary significantly from state to state, so it’s crucial to consult your state’s tax guidelines or a professional tax advisor. Understanding your eligibility for state-level deductions can make a significant difference in your tax liability.

Pro Tip: Even if your state doesn’t allow a deduction, keeping records of your payments is essential. If federal laws change, you’ll want to have accurate documentation.

Looking Ahead: What Could Change?

The suspension of miscellaneous itemized deductions, including union dues, is set to expire at the end of 2025. Unless new legislation extends the suspension, union dues could become federally deductible again starting with the 2026 tax year.

Stay informed about potential legislative changes, as they could reopen opportunities to deduct union dues on your federal tax return. Being proactive now can save you time and effort when these rules shift.

How to Manage Union Dues for Tax Purposes?

Even if union dues aren’t currently deductible on your federal tax return, there are practical steps you can take to prepare for potential changes and maximize your tax benefits where possible.

1. Keep Detailed Records

Maintain clear and accurate records of all union dues payments. This includes:

  • Monthly or annual dues payments
  • Any special assessments or additional fees paid to your union

These records will be invaluable if federal deductions for union dues are reinstated after the TCJA suspension expires. They’re also essential for claiming deductions on state tax returns where applicable.

2. Consult a Tax Professional

Tax laws are complex and constantly changing. Consulting a tax professional can help you:

  • Understand your state’s rules on union dues deductions
  • Optimize your deductions if you’re self-employed
  • Prepare for future changes in tax law that might affect the deductibility of union dues

3. Monitor Legislative Updates

Tax laws are subject to change, and staying informed about potential developments is critical. Legislative decisions regarding the expiration or extension of the TCJA’s suspension on deductions could significantly impact your ability to claim union dues in the future. Subscribe to updates from reputable sources like the IRS or your state tax department to stay ahead.

Future Outlook: Union Dues and Taxes Beyond 2025

As the suspension of miscellaneous deductions nears its expiration, many taxpayers are wondering what’s next. If Congress allows the current rules to expire, union dues may once again become deductible as part of miscellaneous itemized expenses. However, new legislation could either extend the suspension or create entirely new guidelines.

What This Means for You?

  • Prepare for Changes: Keep detailed records now to take full advantage of any future tax benefits.
  • Advocate for Clarity: Reach out to union leaders or tax advocacy groups to stay informed and push for policies that benefit unionized workers.

Stay Proactive

Regardless of what happens, being proactive is your best strategy. Review your financial situation regularly, consult with a tax expert, and ensure you’re ready to adapt to any new rules.

Conclusion

Union dues are a critical expense for workers, supporting the essential work of labor unions. While these payments aren’t federally deductible for most employees today, exceptions exist for self-employed individuals, and some states still offer deductions. With the potential for federal rules to change in the coming years, it’s more important than ever to stay informed, keep detailed records, and seek professional advice.

By understanding the current landscape and preparing for future changes, you can maximize your financial benefits while continuing to support the vital work of your union. Tax laws may be complex, but with the right strategies, you can navigate them with confidence.