2013 Itemized Deductions Limitation

You can thank Donald Pease democratic congressman from Ohio for this nice little haircut in your deductions who originally sponsored this legislation. If your adjusted gross income(AGI) exceeds $250,000 (single) or $300,000 (joint), you have to reduce your itemized deductions by 3% of the excess AGI over those amounts. These thresholds will be adjusted for inflation after 2013. All itemized deductions are affected except casualty losses, gambling losses, investment interest, and medical expenses which are not reduced. You also cannot lose more than 80% of the itemized deductions which are affected such as charitable contributions, state and local taxes, mortgage interest, and miscellaneous. For example, a couple with an adjusted gross income of $745,000 would lose $13,350 in itemized deductions based on the following calculation: $745,000-$300,000 x 3% = $13,350.