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2013 Income tax filers will discover that Pease
limitations on itemized deductions have returned with a new twist. These limitations were the brainchild of
Democrat Donald Pease, then congressman from Ohio. Under Pease’s scheme, up to 80% of your
itemized deductions could vanish before your eyes at income-tax-filing time. Most itemized deductions were reduced by 3
percent of the excess of your Adjusted Gross Income (AGI) over a specified
threshold or 80% of your deductions, whichever was less. When George Bush got into office in 2001, the
Economic Growth and Tax Relief Reconciliation Act resulted in the Pease
limitations being phased out by 2010.
Thus, for tax years 2010, 2011, and 2012, taxpayers could claim the full
amount of their itemized deductions on the Federal income tax returns.
This is one “Bush tax cut” which has not been extended. Thus, middle income taxpayers filing their
2013 income tax returns may be distressed to find that the Pease limitation on
itemized deductions is back. There is a
new twist, however. Instead of a single
AGI threshold, there are now different thresholds depending on filing status:
$250,000 for single filers, $275,000 for heads of household and $300,000 for
married-filing-jointly.
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