What is Itemized deduction limit for the 37% bracket?
In short
From 2026, the One Big Beautiful Bill Act reduces itemized deductions for taxpayers in the 37% bracket by 2/37 of the smaller of their itemized deductions and their income above the start of that bracket, capping each deduction's value at about 35 cents per dollar.
Key takeaways
- It replaces the older overall limitation on itemized deductions, which is permanently repealed.
- It can favor accelerating large deductions, such as charitable gifts, into 2025.
- Taxpayers below the 37% bracket aren't affected.
Where it's tested
TCP: Individual Tax Planning Strategies — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A taxpayer sells stock at a $10,000 loss on December 10 and repurchases the same stock on December 28 of the same year. What is the tax result?