Tax reform changed the rules of union due deductions. To help you determine whether your union dues are tax-deductible, it’s essential to understand what exactly union dues are and how they compare to your regular work expenses.
The answer to your question is that the deduction for union dues and all employee expenses has been eliminated for tax years 2018 through 2025, regardless of whether an employee can itemize. In contrast, if a taxpayer is self-employed and pays union dues, then they are deductible as a business expense.
What are Union Dues?
Union dues are a set fee paid by members to their respective unions. Dues are typically used for lobbying efforts, political action committees, and strike funds. Dues vary from country to country and even from one union to another.
The number of dues paid may also be related to a member’s income, time served in a particular job, or seniority status.
Generally speaking, most unions require new members to pay higher dues than those who have been members for several years or earn hefty salaries.
How Is Union Dues Tax-Deductible?
Workplace unions have historically helped workers receive fair wages and working conditions but are you aware that union membership could also benefit you as a member of your household?
If you are currently supporting a worker who belongs to a labor union, then you may be able to deduct part of your annual fees. Read below to learn how removing your union dues might help reduce your tax burden!
As part of tax reform, unions due to deductions will no longer be allowed. Dues and any employee expenses not itemized by an employee are no longer tax-deductible, regardless of whether they itemize deductions. However, the costs associated with union dues paid by business owners can be deducted as part of their business expenses.
What Are The Tax Benefits of Union Dues?
Union dues may be an inevitable evil for some workers, but at least they provide valuable benefits—one of which is a significant saving on your taxes.
It may surprise you that more than 1 in 3 Americans is in a labor union. Labor unions help improve workplace standards for their members through collective bargaining. They also advocate for better working conditions, pay, and benefits.
Union dues are typically tax-deductible, although many people don’t realize it. And whether or not your union offers you additional ways to save on taxes, understanding how union dues are taxed can help you get more value from them.
If you’re an active labor union member, finding ways to cover your dues is necessary. One such method is through employer contributions or a voluntary paycheck deduction plan. The key is to understand how your dues will be covered before they come due.
Common Questions About Union Dues Taxes
Here are some common questions and answers about union dues taxes.
What is Deductible?
In general, only regular dues are eligible for deduction. Some unions charge additional amounts that are not subject to taxation; these would not be deductible. Furthermore, you can’t deduct any fees paid to a union trust fund or pension fund unless they’re specifically designated for an individual member.
For example, if your union has a health and welfare fund set up for members who have reached retirement age and are no longer working full-time, you may be able to deduct some of your contributions from your taxes.
Are Union Dues Tax Deductible?
This deduction is limited to dues related only to collective bargaining activities. If you’re a teacher paying union dues, only your dues toward negotiating pay and benefits can be deducted from your income taxes.
If you’re a private-sector union member, such as those affiliated with Teamsters or UFCW, none of your union fees are tax-deductible. Occasionally, employees must pay union dues as part of their employment contract.
Are There Other Ways To Save On Taxes With My Union Membership Dues?
If you’re a member of a labor union, you may be able to deduct your annual dues from your taxable income. It could help you save money at tax time, but it depends on your specific situation.
For more details, check out IRS Publication 525.