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.
