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CAUTION

Miscellaneous itemized deductions have been terminated for tax years beginning after 2017. See section 67(h).

The overall limitation on itemized deductions is suspended for tax year 2025 under section 68.

While we continue to discuss miscellaneous itemized deductions under section 67 (and the 2%-of-AGI limitation) and the overall limitation on itemized deductions under section 68, they are suspended for tax year 2025.

Line 9c—Miscellaneous Investment Expenses

Miscellaneous investment expenses are generally no longer deductible. Changes made by P.L. 119-21, commonly known as the One Big Beautiful Bill Act, section 70110, make permanent the disallowance of miscellaneous itemized deductions for tax years beginning after 2017. Because miscellaneous itemized deductions are not allowed in calculating taxable income, they can’t be deductible in calculating NII because section 1411(c)(1)(B) requires an NII deduction to be allowable in computing taxable income.

Most, but not all, investment expenses are miscellaneous itemized deductions. Section 67(b) outlines the types of non-miscellaneous itemized deductions, like investment interest, that still qualify as itemized deductions. Examples of disallowed miscellaneous investment expenses include, but aren’t limited to, investment fees, custodial fees, and other expenses paid for managing investments that produce taxable income.

Under section 163(d)(4)(C), investment expenses are described as the deductions allowed for regular income tax purposes (other than for interest) which are directly connected with the production of investment income. For property held for rents or royalties, this includes deductions under Regulations section 1.1411-4(f)(2) which generally allow section 62 deductions to figure NII related to activity for the production of income. See

18 Instructions for Form 8960 (2025)

Lines 9 and 10—Application of Itemized Deduction Limitations on Deductions Properly Allocable to Investment Income Worksheet

Not for use in 2025 .

Instructions for Form 8960 (2025) 19

Lines 9 and 10—Application of Itemized Deduction Limitations on Deductions Properly Allocable to Investment Income Worksheet— (continued)

20 Instructions for Form 8960 (2025)

Lines 9 and 10—Application of Itemized Deduction Limitations on Deductions Properly Allocable to Investment Income Worksheet— (continued)

Part IV—Reconciliation of Schedule A Deductions to Form 8960, Lines 9 and 10 (Individuals Only)

(B) IF Part III, line 8, is

less than Part III, line 4, THEN divide

(C) Multiply the

line 8 by line 4 AND enter the amount in column

individual amounts in column (A) by the amount in column

9 and 10.

(A) Re-enter the amounts and descriptions from Part III, lines 1–

(B). IF the amounts reported on Part III,

lines 4 and 8, are equal, THEN enter

1.00 in column (B).

appropriate locations on lines

(B). Enter these

amounts in the

Miscellaneous itemized deductions properly allocable to investment income:

Description Line Amount

1. (a) × =

(b) × =

2. State, local, and foreign income taxes . . . . . . . . . . × =

Itemized deductions subject to section 68 included on line 3 of Part III:

3. (a) × =

(b) × =

Instructions for Form 8960 (2025) 21