Named after a congressman of course, the Pease limitation is another blast from the past that had to be dealt with during the Fiscal Cliff legislation enacted, January 2, 2013, but called the American Tax Payer’s Relief Act of 2012.
The concept was to reduce the total amount of itemized deductions taxpayers could claim once their adjusted gross income breached certain thresholds. We haven’t had this limit since before 2010, but it was set to come back in 2013 unless Congress road to the rescue.
The Pease limitation was permanently repealed for Adjusted Gross Income at or below $300K Married Filing Jointly, $150K Married Filing Separately, $275K Head of Household or $250K for Single Filers.
For those with income above the amounts provided above, the Pease limitation has returned to life and will reduce itemized deductions by the lesser of 3% of the taxpayers Adjusted Gross Income in excess of the above limits or 80% of the amount of itemized deductions.