Job Search Expenses and Your Taxes: What Still Applies and What Has Changed

While most federal job search deductions have been suspended, some costs may still provide tax benefits under other rules

In past years, job seekers could deduct certain expenses related to finding new employment in the same line of work as their most recent job. These deductions applied whether or not the search was successful, and they covered a range of costs from resume preparation to travel for interviews. However, significant changes in federal tax law have altered what is deductible. Many job search deductions were suspended for tax years 2018 through 2025 under the Tax Cuts and Jobs Act. Although these suspensions are still in place for now, there are still ways to benefit from some job search related expenses through other parts of the tax code. Understanding the current rules can help you avoid missing out on legitimate tax advantages.

The first and most important point is that the federal itemized deduction for unreimbursed job search expenses no longer applies for most taxpayers. This means you cannot simply list these costs on Schedule A and reduce your taxable income as was possible before 2018. Unless Congress takes action to reinstate these provisions, the suspension remains in effect for the 2025 tax year. This change applies nationwide, including North Carolina. Taxpayers must look instead to other types of deductions, credits, or reimbursed expense arrangements to offset the costs of a job search.

Historical rules and the two percent threshold

Before the law changed, job search expenses could be deducted as miscellaneous itemized deductions. They were subject to a floor equal to two percent of your adjusted gross income. This meant that only the portion of your expenses above that threshold could be claimed. For example, if your adjusted gross income was $50,000, you could deduct only the amount of qualifying job search costs that exceeded $1,000. This rule is no longer in effect, but it is useful to understand it in case these deductions are reinstated in the future.

Same line of work requirement

Even when job search deductions were allowed, they applied only to searches for employment in the same field as your most recent position. A teacher looking for another teaching job could qualify, but a teacher moving into firefighting could not. This requirement prevented people from deducting costs related to a complete career change. While the federal deduction is suspended, the concept of defining the type of work still matters when determining eligibility for certain state programs or when documenting expenses for employer reimbursement.

Resume and application related costs

Many job seekers still spend money on creating or updating their resumes, even if those costs are not currently deductible under federal law. This can include professional resume writing services, printing costs, postage for mailing applications, and fees for professional portfolio preparation. While you cannot claim these expenses directly on your federal return in 2025, you might be able to treat them as a reimbursable business expense if you are in a temporary employee status and your employer agrees to cover them. Some professional associations also offer grants or stipends to cover these costs.

Travel for interviews

Travel expenses to attend interviews or networking events were once a common deduction. These could include airfare, mileage, lodging, and even certain meal costs if the primary purpose of the trip was job seeking. The IRS made it clear that combining job search with personal travel limited the deduction. For example, a vacation with a short interview would not have qualified. Now that the federal deduction is suspended, these costs generally cannot be claimed. However, if you are self employed and seeking new contracts or clients in the same business, related travel may still qualify as a business expense. This distinction matters for consultants, freelancers, and independent contractors who may be looking for their next project.

Placement agency and recruiter fees

Fees paid to an employment agency or recruiter to help you secure work were previously deductible. These agencies may provide services such as matching candidates to open positions, coaching, or arranging interviews. Today, such fees are not deductible for most taxpayers, but they may still be claimed as a business expense for self employed individuals. In North Carolina, certain workforce development programs operated through NCWorks offer free placement assistance that can reduce or eliminate the need to pay these fees out of pocket.

Reimbursed costs are never deductible

This rule has not changed. If an employer, former employer, or any other source reimburses you for a job search expense, you cannot deduct it. Keeping accurate records of both expenses and reimbursements is important in case of an audit or a request for documentation.

First time job seekers

The original rules never allowed deductions for those seeking their first job. The logic was that the deduction applied only when you were trying to continue your career in the same field. This is still the case. If you have never worked before, you cannot deduct the cost of finding your first position. However, some job training programs and nonprofit organizations offer stipends or expense reimbursements for first time job seekers, and those benefits may be tax free depending on their structure.

Educational courses

Job search deductions have never included educational expenses. Even if you took a course to improve skills in your current field, it was not eligible under the job search deduction. The good news is that certain education related costs may qualify for other tax benefits. These include the Lifetime Learning Credit, the American Opportunity Credit, and in some cases the tuition and fees deduction if it is available in the year you file. You should also check whether your employer offers education reimbursement that can be excluded from your taxable income.

Time between jobs

Under the prior rules, a significant break between your last job and the start of your search could make expenses non deductible. The IRS never provided an exact definition of significant, but long gaps such as leaving the workforce for many years to care for family generally disqualified expenses. Shorter breaks, such as a few months between positions, were usually acceptable. This rule is not currently relevant for deductions, but it can still matter for certain state or private programs that reimburse job search expenses, as they may require you to apply within a certain period after leaving a job.

Current status for 2025

For the 2018 through 2025 tax years, the federal deduction for most job search expenses remains suspended. It is unclear whether Congress will reinstate it in future years. In the meantime, taxpayers should look for alternative tax benefits. Self employed individuals may claim certain search related expenses as business costs. Some states or local workforce agencies may offer credits, grants, or reimbursements, although North Carolina does not currently provide a direct state tax deduction for these expenses. However, programs such as NCWorks, the NC Department of Commerce, and local career centers can reduce or eliminate the need to pay out of pocket by providing free or subsidized job search assistance.

Practical steps for job seekers

• Keep detailed records of all job search expenses, even if they are not currently deductible. Rules can change, and you may be able to claim them in the future.
• Ask prospective employers whether they reimburse travel or relocation costs for interviews.
• Use free or low cost resume and networking resources through state employment agencies or libraries.
• For self employed workers, categorize search related costs correctly so they can be deducted as ordinary and necessary business expenses.
• Explore tax credits for education or training that improve your job prospects.

While the federal deduction for job search expenses is currently unavailable for most taxpayers, careful planning can still reduce your costs. Taking advantage of available state programs, employer reimbursements, and other tax benefits can help you pursue new opportunities without overspending in the process.