Sentences with phrase «pease limitation»

• Reinstates the Pease / PEP phaseouts for deductions; for married taxpayers with AGI above $ 300,000 ($ 250,000 single), the Pease limitation reduces total itemized deductions by 3 percent for the dollar amount of AGI above the thresholds.

Notably, this means the Pease limitation did not actually impact the tax benefit of his charitable giving, which still generated 33 - cents - on - the - dollar in tax savings at his current 33 % tax bracket, because the Pease limitation impacts the deductions he already took, not the new deductions at the margin!

However, because Jerry's $ 300,000 income is beyond the AGI threshold, his deductions under the Pease limitation are reduced by $ 41,750 x 3 % = $ 1,253, so his total deductions are only $ 52,747, and in turn Jerry's taxable income after deductions would be $ 247,253 (ignoring Personal Exemptions for a moment), placing Jerry in the middle of the 33 % tax bracket.

These two rules, triggering a phaseout of itemized deductions and personal exemptions, are also known respectively as the Pease Limitation on itemized deductions (named after Representative Donald Pease [D - Oh.]

Yet the irony is that while they are referred to as «phaseouts of itemized deductions» and a «personal exemption phaseout» the reality is that the Pease limitation and PEP are applied primarily based on the extent by which someone's income is over specified thresholds.

Upon reaching the 35 % tax bracket, the Pease limitation is equivalent to a 1.05 % surtax; at the 39.6 % bracket, it is a 1.19 % income surtax.

Although notably, once the PEP and Pease limitation is in effect, any above - the - line tax deductions become slightly more valuable than below - the - line strategies like charitable giving (because an above - the - line deduction is not only an outright tax deduction, but also reduces exposure to PEP and Pease themselves).

As a result, it is rare for the cap on the Pease limitation to be reached.

Given that the PEP and Pease limitation effectively operate as surtaxes on income that increase the marginal tax rate, planning for / around them occurs the same way any planning should occur based on marginal income tax rates: defer or minimize income when marginal rates are high, and accelerate income if / when marginal rates are low (to avoid higher rates in the future).

After all, even with no other deductions, a mere 3 % state income tax rate is sufficient to increase itemized deductions as quickly as they are being phased out, such that the cap on the Pease limitation would never be reached.

As with the Pease limitation, this marginal tax rate impact is higher as the tax bracket itself increases; the PEP results in a surtax of 1.11 % in the 35 % bracket.

The Pease limitation on itemized deductions is often referred to as a «penalty» against claiming itemized deductions, and a disincentive against deduction - related strategies (e.g., charitable giving).

At the simplest level, though, the point is just that planning will really occur the same way it always does, just based on marginal tax rates that are slightly higher once the impact of the PEP and Pease limitation are accounted for.

Notably, the tax benefits of charitable giving are impaired in situations where the 80 % cap on the Pease limitation has been reached, but in any other scenario when the Pease limitation remains below the cap, all the normal strategies to maximize tax deductions and savings still apply.

The original proposal from President Trump would keep all itemized deductions, but enact a more aggressive version of the Pease limitation (phasing out many deductions at higher income levels).

The overall limit on itemized deductions that applied to higher - income taxpayers (commonly known as the «Pease limitation») is repealed, and the following changes are made to individual deductions:

Eliminates the Pease limitation on itemized deductions.

It was estimated that the Pease limitations increased a taxpayer's marginal tax rate by about 1 %.

And a direct negative effect on housing demand would come from the return of the Pease limitations, which would reduce the value of the mortgage interest deduction (MID) for taxpayers in high cost areas.

Not exact matches

Since the «Pease» limitation reduced the benefits of itemized deductions (including charitable contributions), repealing it allows high earning taxpayers to go back to enjoying the full benefits of these deductions.

The Act repeals the «Pease» limitation, whose original intent was to raise tax revenue by increasing the taxable income for high - income earners.

High - income taxpayers have their itemized deductions reduced by the limitation on itemized deductions, called «Pease» after the Ohio congressman who proposed the provision.

The limitation on itemized deductions (sometimes called «Pease» after the Ohio congressman who proposed it) reduces deductions for high - income taxpayers by 3 percent of the amount by which their AGI exceeds a threshold — $ 261,500 in 2017 ($ 287,650 for heads of household, $ 313,800 for married couples filing jointly, and half of that for married couples filing separately)-- but not by more than 80 percent of deductions claimed.

High - income taxpayers have their itemized deductions reduced by the limitation on itemized deductions, called «Pease» after the Ohio congressman who proposed the provision.