732 / What is the limitation on certain high-income taxpayers’ itemized deductions?
There was no phaseout of itemized deductions based on adjusted gross income (AGI) in 2010-2012. Under the American Taxpayer Relief Act of 2012 (“ATRA”), the phaseout resumed for tax years beginning in 2013-2017, and was once again suspended for 2018-2025.
Therefore, in 2017, the aggregate of most itemized deductions was reduced dollar-for-dollar by the lesser of: (1) 3 percent (but see Adjustments to Limit, below, for tax years beginning before 2010) of the amount of adjusted gross income that exceeds a certain income-based threshold amount, or (2) 80 percent of the amount of such itemized deductions otherwise allowable for the taxable year.2 In 2017, the thresholds were $261,500 for individual taxpayers, $313,800 for married taxpayers filing jointly, $287,650 for heads of households and $156,900 for married taxpayers filing separately.3 In 2016, the thresholds were $259,400 for individual taxpayers, $311,300 for married taxpayers filing jointly, $285,350 for heads of households and $155,650 for married taxpayers filing separately.4 In 2015, the thresholds were $258,250 for individual taxpayers, $309,900 in the case of a married taxpayer filing jointly, $285,050 for heads of household, and $154,950 for married taxpayers filing separately) The threshold income levels for determining the phaseout are adjusted annually for inflation.5
Adjustments to limit for 2005-2009 tax years. For taxable years beginning after 2005, the limitation on itemized deductions was gradually reduced until it was completely repealed in 2010. The amended limitation amount was calculated by multiplying the otherwise applicable limitation amount by the “applicable fraction.” The “applicable fraction” for each year was as follows: 66.6 percent (?) in 2006 and 2007; 33.3 percent (?) in 2008 and 2009; and
0 percent in 2010-2012.6