The Tax Cuts and Jobs Act has removed the overall limitation on itemized deductions for high-income earners.

Prior Law

Through December 31, 2017

An overall limitation on itemized deductions is in place to reduce itemized deductions by 3% of the amount by which the taxpayer’s AGI exceeds a threshold amount. For 2017, this threshold amount is $261,500 for single filers, $313,800 for joint filers and surviving spouses, $287,650 for head of household, and $156,900 for married filing separately. The overall limitation does not reduce itemized deductions by more than 80% of the total.

New Law

Effective for tax years beginning after December 31, 2017, and before January 1, 2026

This limitation is suspended for tax years 2018-2025.

Commentary

While the suspension of the overall limitation on itemized deductions will likely help high- income earners, with the increased standard deduction starting in 2018, it is expected that fewer taxpayers will itemize deductions.

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Curt Bach
I joined Hawkins Ash CPAs in August 2010, and am currently a manager in the firm’s Medford office. I provide a variety of tax services, including trust and estate tax preparation and planning. I have more than nine years of experience providing audit and tax services to nonprofit organizations, governmental entities and small businesses. I am a member of our firm’s tax committee and not-for-profit service group.

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