Author: Leon Clinton

The One Big Beautiful Bill Act (OBBBA) makes significant changes to the educator expense deduction—for 2025 and beyond. If you are a teacher, a coach, a counselor, or some other school professional, here’s what you need to know to maximize your tax savings.

Current Rule for 2025

For 2025, eligible educators may claim an above-the-line deduction of up to $300 for classroom-related expenses. An above-the-line deduction reduces your adjusted gross income (AGI), which is always a tax advantage.

Unfortunately, any expenses above $300 are not deductible in 2025 because the law permanently disallows them as miscellaneous itemized deductions.

To qualify as an eligible educator, you must work at least 900 hours during the school year as a K-12 teacher, instructor, counselor, principal, or aide at a state-recognized school. Allowable expenses include

• books and classroom supplies, excluding athletic supplies for health and physical education (PE) courses;
• computer equipment, software, and related services;
• other instructional equipment and supplementary materials; and
• professional development courses directly tied to your teaching.

Big Enhancements Starting in 2026

Beginning in 2026, the OBBBA expands and improves the deduction as follows:

• Keeps the $300 above-the-line deduction in place
• Allows expenses above $300 as itemized deductions (if you itemize)
• Expands the definition of “eligible educator” to include coaches and interscholastic sports administrators
• Expands deductible expenses to include athletic supplies for health and PE courses
• Broadens eligible use from “in the classroom” to “as part of instructional activity”

Example. Sally, an 11th-grade teacher, buys a projector for $1,400 in 2026. She deducts $300 above the line and, because she itemizes, deducts the remaining $1,100 on Schedule A. Under prior law, only $300 would have been deductible.

Planning Tip

The enhanced rules help only if your total itemized deductions exceed the standard deduction. With the OBBBA’s expansion of the state and local tax (SALT) deduction, more taxpayers may qualify to itemize starting in 2026.

Regardless of your situation, keep detailed receipts for all educator-related expenses so you can claim every dollar you are entitled to.

Takeaway

For 2025, the maximum deduction remains $300.

Beginning in 2026, the OBBBA makes educator deductions far more valuable by preserving the $300 above-the-line write-off and allowing additional itemized deductions, while also broadening the eligibility criteria and the types of expenses that qualify.

If you would like to discuss educator expenses, please call me directly at 408-778-9651  

• By Leon Clinton
• October 10, 2025

The One Big Beautiful Bill Act (OBBBA) introduced a brand-new savings vehicle: Trump Accounts. At first glance, they appear to be traditional IRAs, but they come with special rules for beneficiaries under the age of 18. Used wisely, they can provide a powerful head start on your child’s financial future.

Free Starter Money for Newborns

As part of a pilot program, parents of U.S. citizen newborns in 2025-2028 can elect to enroll their child in a Trump Account. Once the parent makes the election, the federal government will deposit $1,000 of free seed money into the account.

Starting July 4, 2026, parents, grandparents, or others may contribute up to $5,000 per year (indexed for inflation beginning in 2028) until the year the child turns 18. The $1,000 government contribution does not count against this limit. To participate, your child must have a Social Security number when you make the election.

How Trump Accounts Work

• Contributions by individuals made before the year the child reaches age 18 are not deductible, but funds inside the account grow tax-deferred.
• No withdrawals are permitted until the child reaches the age of 18.
• When the child reaches 18, the Trump Account automatically converts into a traditional IRA, subject to the normal rules governing IRA contributions and distributions.
• At that point, your child must have earned income to continue contributing. The account can later be converted into a Roth IRA if desired.

Investments and Employer Contributions

Until the child turns 18, the account can only hold “eligible investments”—low-cost index mutual funds and ETFs that meet IRS guidelines.

Employers may also contribute up to $2,500 annually (indexed for inflation after 2028) to Trump Accounts set up for under-age-18 employees or dependents of employees. These contributions are tax-free to the employee and deductible for the employer as fringe benefits.

State, local, or nonprofit organizations may also make contributions under future IRS rules.

Why This Matters

Over time, Trump Accounts can grow into substantial savings. For example, if you contribute $5,000 annually for 17 years, plus the $1,000 government seed, and the account grows at 5 percent per year, it could be worth about $138,000 by the time your child turns 18. If left invested until your child reaches age 60, that balance could grow to over $1.2 million.

Unlike 529 plans or Coverdell accounts, Trump Accounts don’t require your child to use the funds for education. Unlike custodial accounts or trusts, they offer tax-deferred growth and avoid many of the kiddie tax pitfalls.

Bottom Line

Trump Accounts may not be perfect, but with free starter money, meaningful contribution limits, potential employer or community support, and decades of tax-deferred compounding, they can be a strong wealth-building tool for children.

If you would like to discuss Trump Accounts, please call me directly at 408-778-9651  

• By Leon Clinton
• October 7, 2025

Do you like to gamble? If so, Congress has some bad news for you.

The One Big Beautiful Bill Act (OBBBA), recently passed, limits how much you can deduct for gambling losses starting in 2026. Both casual and professional gamblers may deduct only 90 percent of their losses against their winnings. The remaining 10 percent of losses disappear permanently—you can’t use them in future years.

Congress added this last-minute change to the OBBBA, which could significantly impact gamblers.

What This Means for You

Right now, gamblers may deduct losses only up to the amount of their winnings. Casual gamblers may deduct losses only if they itemize personal deductions. Beginning in 2026, you won’t even deduct all your losses.

This rule could force you to pay tax on “phantom income”—money you never really earned. For example, if you win $10,000 and lose $10,000 in 2026, you’ll report $10,000 in gambling income but deduct only $9,000 in losses. That leaves you with $1,000 in taxable income, even though you broke even.

Current Efforts to Reverse the Law

Gamblers across the country have expressed outrage, and lawmakers have already introduced three bills to eliminate this 10 percent haircut. Whether Congress will act remains uncertain.

What You Should Do Now

Regardless of what happens in Congress, you need accurate records of your gambling activity. Keep detailed records of your wins and losses, especially losses.

Track your gambling by session, not by individual bet. At year’s end, add up all winning sessions separately from all losing sessions.

Don’t rely on casino win/loss statements—they often inflate winnings and underreport losses.

If you want to discuss the impact of gambling on your taxes, please call me directly at 408-778-9651  

• By Leon Clinton
• October 3, 2025