Construction worker tax deductions: checklist for W-2 tradespeople and 1099 subs

Carpenters, electricians, ironworkers, laborers and plumbers can be paid two ways. A contractor that puts you on payroll sends a Form W-2. A general contractor that hires you to do a scope of work sends a Form 1099-NEC, and you run a business.

The split sets what your receipts are worth. For a W-2 worker, tools, boots and union dues you pay yourself are miscellaneous itemized deductions. The law allows none of them for any tax year beginning after December 31, 2017, and states no end date (26 U.S.C. 67). Your state may still allow them, so keep the receipts if your state return uses them.

A 1099 sub claims the same costs as business expenses. That is why many workers who switch between payroll jobs and side jobs keep two folders.

The big change for payroll tradespeople is overtime. Qualified overtime is only the premium that section 7 of the Fair Labor Standards Act requires above your regular rate: on time-and-a-half, the half (IRS FS-2026-13, overtime deduction FAQs). You can deduct up to $12,500 of it, or $25,000 joint, and the deduction shrinks once modified AGI passes $150,000, or $300,000 joint (IRS FS-2026-13, overtime deduction FAQs).

A union contract can pay more, such as double time after ten hours or on Saturdays. Only the part the FLSA itself requires counts, and a foreman or superintendent the FLSA exempts from overtime gets none, whatever the contract says (IRS FS-2026-13, overtime deduction FAQs). Keep the page of the contract that sets the overtime rule.

From 2026 the Form W-2 shows qualified overtime in Box 12 under code TT, and for tax years after 2025 you can deduct only the amount reported there (IRS FS-2026-13, overtime deduction FAQs). For 2025, the W-2 may show nothing, so bring every pay stub with overtime hours and rates (IRS FS-2026-13, overtime deduction FAQs).

Add Form 1099-G if you drew unemployment between jobs, since states use it to report those payments (About Form 1099-G). Add Form 1098-T for apprenticeship or trade school classes at an eligible school. The Lifetime Learning Credit covers courses taken to get or improve job skills (IRS Publication 970).

Travel rules matter most to subs who chase work. A temporary work location is a job you expect to last one year or less, and it keeps your tax home where it was (IRS Publication 463). So lodging and meals on an out-of-town job can be deductible. A job expected to run longer than one year is indefinite, and that site becomes your new tax home (IRS Publication 463).

Meals on the road are generally deductible at 50% (IRS Publication 463). Keep lodging receipts, the meal receipts or a per diem count, and the job start and end dates.

Some trips never count. Driving from the union hall to the job is commuting, even though the hall gives the assignment (IRS Publication 463). Hauling tools in your truck does not turn a commute into business travel. Only the extra cost, such as renting a trailer, counts (IRS Publication 463).

A midday run from the framing site to the lumber yard and back is business use. In May 2026 it earns 72.5 cents a mile, and in November 76 cents (IRS mileage rates). The mileage log checklist shows how to keep those trips apart from the commute.

Keep each tool invoice with the date it went to work. A cordless drill kit or a laser level billed at $2,500 or less per item can be expensed at once under the de minimis safe harbor, if your books are not audited (IRS, Tangible property regulations). For a bigger buy such as a skid steer acquired after January 19, 2025, a 100% first-year write-off is permanent (IRS, 2025 law for businesses).

Truck weight changes the write-off. Depreciation caps apply to a passenger auto, which for trucks means 6,000 pounds or less of gross vehicle weight (IRS Publication 946). Photograph the door sticker, and keep the purchase or lease papers and the loan statement.

Safety gear counts for a sub: hard hats, steel-toe boots, high-vis vests, respirators and gloves. Add contractor license fees, permits, OSHA courses and trade certifications. Keep general liability, workers’ comp and bond premiums too.

A general contractor that paid you for a 2025 scope sent Form 1099-NEC once it reached $600 (Form 1099-NEC instructions, 2025). For 2026 work, the GC files only at $2,000 or more (Form 1099-NEC instructions). Bring your invoices too, because the form shows what was paid, not what you billed. The 1099 contractor checklist covers the forms you send your own helpers.

Here, retainage is the part of each payment a general contractor holds back until the job is done. Keep the pay apps or statements that show it, so your preparer can see when the held amount was paid.

Homeowners who pay a punch-list job by card show up on Form 1099-K from your processor, at any total (IRS, Understanding Form 1099-K). Home repair workers, home electricians and home plumbers are listed tipped jobs, codes 401, 403 and 404 (IRS tipped occupations list). A homeowner’s tip for a fixed leak can be deductible, to a $25,000 yearly limit that narrows for modified AGI over $150,000, or $300,000 joint (IRS, 2025 law for individuals).

Collect a Form W-9 from each helper you pay, and note each quarterly tax payment, since no one withholds from a sub’s draws.

• 26 U.S.C. 67: No miscellaneous itemized deduction is allowed for any taxable year beginning after December 31, 2017.
• IRS FS-2026-13, overtime deduction FAQs: Supersedes FS-2026-01. Only overtime required by FLSA section 7 (29 USC 207) qualifies; an FLSA overtime-ineligible employee has no qualified overtime whatever a union contract says; only the premium needed to satisfy section 207 counts, not double time; from 2026 qualified overtime is reported in W-2 box 12 code TT, and for tax years after 2025 only the amount so reported can be deducted; the deduction phases out above $150,000 of MAGI ($300,000 joint).
• IRS, 2025 law for individuals: For 2025 through 2028, qualified tips in a listed occupation are deductible up to $25,000, capped at net business income for the self-employed, and phased out above $150,000 of modified AGI ($300,000 joint); people self-employed in a specified service trade or business, and employees of an employer in one, do not qualify; an SSN and a joint return if married are required; qualified overtime is deductible up to $12,500 ($25,000 joint), with the same phase-out.
• About Form 1099-G: Governments file Form 1099-G to report unemployment compensation they paid.
• IRS Publication 970: The Lifetime Learning Credit is available for courses taken to acquire or improve job skills at an eligible institution, including vocational schools.
• IRS Publication 463: Travel to a temporary work location expected to last a year or less is deductible; trips from a union hall to the job are commuting; only the extra cost of hauling tools is deductible; with a home principal place of business, trips to clients are deductible.
• IRS mileage rates: The business standard mileage rate is 70 cents a mile for 2025, 72.5 cents for January 1 to June 30, 2026, and 76 cents for July 1 to December 31, 2026.
• IRS, Tangible property regulations: Without an applicable financial statement, the de minimis safe harbor lets a business deduct up to $2,500 per invoice or item.
• IRS, 2025 law for businesses: A permanent 100% first-year depreciation applies to qualified property acquired after January 19, 2025; the section 179 limit rose to $2,500,000.
• IRS Publication 946: A passenger automobile for the depreciation limits is rated at 6,000 pounds or less of gross vehicle weight for trucks and vans.
• Form 1099-NEC instructions, 2025: For 2025, Form 1099-NEC reported nonemployee pay of $600 or more, and Form 1099-MISC reported rents and medical and health care payments of $600 or more.
• Form 1099-NEC instructions: For tax years beginning after 2025, the reporting threshold for Form 1099-NEC and for rents and medical and health care payments on Form 1099-MISC is $2,000; payments to a corporation are generally not reportable, but medical and health care payments to a corporation are.
• IRS, Understanding Form 1099-K: A payment card processor sends Form 1099-K for card payments no matter how many or how much; payment apps and online marketplaces must send one when payments for goods or services exceed $20,000 in more than 200 transactions, and may send one for less.
• IRS tipped occupations list: The Treasury Tipped Occupation Codes, among them 401 home repair, 402 home landscaping, 403 home electricians, 404 home plumbers, 407 home cleaning, 602 massage therapists, 603 barbers and hairstylists, and 608 exercise trainers.