Pennsylvania is one of the few states that still lets W-2 employees deduct unreimbursed job-related expenses on their state return, even though the equivalent federal deduction is gone for good. The Tax Cuts and Jobs Act suspended it starting in 2018, and the 2025 One Big Beautiful Bill Act made that suspension permanent — so unlike some TCJA provisions that were always scheduled to sunset, unreimbursed employee expenses are not coming back on your federal return. PA’s version, claimed on Schedule UE, is now the only place most W-2 employees can deduct these costs at all.
Who Can File Schedule UE
Schedule UE is for W-2 employees who paid work-related expenses their employer didn’t reimburse, and that were required as a condition of employment. It doesn’t apply to self-employed workers, contractors, or gig workers — they deduct business expenses on PA Schedule C-equivalent instead, which was never affected by the federal suspension in the first place.
Expenses That Typically Qualify
- Tools, supplies, and equipment required for your job that your employer didn’t provide
- Required uniforms and safety gear not suitable for everyday wear
- Union dues and required professional license fees
- Travel between job sites (not your regular commute) and related vehicle expenses
- A home office, if your employer requires it and doesn’t provide alternative workspace (see the stricter PA rules below)
Vehicle Expenses: Standard Mileage or Actual Costs
For business driving between job sites (not your commute to a regular workplace), PA gives you a choice:
- Standard mileage rate — multiply your business miles by the federal per-mile rate for the year. For 2026, that’s 72.5¢/mile for miles driven January–June and 76¢/mile for miles driven July–December, following the IRS’s mid-year rate increase.
- Actual expenses — total up gas, repairs, insurance, and other vehicle costs, then apply your business-use percentage (business miles ÷ total miles driven).
You can’t mix methods for the same vehicle in the same year, and if you use the standard mileage rate you can’t also claim depreciation on that vehicle. If you use more than one vehicle for work, you’ll complete a separate mileage calculation for each.
Home Office: PA’s Rules Are Stricter Than Federal
If you’re used to the federal simplified home office method ($5/sq ft), forget it here — Pennsylvania does not allow the safe-harbor simplified method on Schedule UE. You must use actual expenses (rent or mortgage interest, utilities, insurance, and repairs, apportioned by the percentage of your home used for work).
You also need to clear all three of these tests, not just one:
- Your employer requires you to maintain a work area away from its premises
- That home work area is your principal place of performing your job duties
- You use the space regularly and exclusively for work — not a kitchen table that doubles as a dinner spot
If the answer to any one of those is no, PA disallows the home office deduction entirely — there’s no partial credit.
What You’ll Need: Employer Certification and Records
PA wants proof the expense was actually required and unreimbursed, not just plausible. Keep:
- A signed letter from your employer confirming the expense was required and not reimbursed — the state provides a template, Form REV-757, for this
- If your employer won’t sign a letter, a copy of their written expense reimbursement policy (Form REV-775) or a signed affidavit can substitute
- Receipts for every expense claimed, kept for at least 7 years
- A detailed mileage log if claiming vehicle expenses — date, starting and ending odometer readings, and business purpose for each trip
Estimates and reconstructed logs don’t hold up well if the PA Department of Revenue asks for documentation. Track expenses as they happen rather than trying to rebuild a year of driving from memory in April.
Frequently Asked Questions
Can I deduct unreimbursed employee expenses on my federal return too?
No. The 2025 One Big Beautiful Bill Act made the TCJA’s suspension of these expenses permanent at the federal level. PA Schedule UE is now the only place W-2 employees can deduct them — there is no federal counterpart to layer on top.
Does Schedule UE reduce my income dollar-for-dollar?
Yes — unlike federal miscellaneous itemized deductions (which used to require clearing a 2%-of-AGI floor before you saw any benefit), PA Schedule UE deducts your qualifying expenses directly from your PA-taxable compensation, with no floor to clear first.
What if I work from home by choice, not because my employer requires it?
Then you don’t qualify for the home office portion of Schedule UE. PA’s first test requires that your employer require you to maintain a home work area rather than provide one at its own location. A remote-friendly policy that simply permits working from home usually isn’t enough on its own — get it in writing from your employer if there’s any ambiguity.
For educational purposes only. Not tax advice. PA rules sourced from the PA Department of Revenue’s Schedule UE instructions and unreimbursed business expense guidance. Federal treatment sourced from the 2025 One Big Beautiful Bill Act. Consult a licensed PA tax professional for guidance specific to your situation.