How Did the Pease Limitation Work (and Why Was It Repealed?)

The Pease limitation was repealed in 2018, but it could come back in 2026

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The Pease limitation put a cap on how much certain taxpayers could claim in the way of itemized deductions before it was repealed in December 2017. Taxpayers with adjusted gross incomes (AGIs) over certain thresholds were limited as to the deductions they could claim.

Named for Congressman Donald Pease from Ohio, the politician who first introduced the legislation in 1991, the Pease limitation was first repealed from 2010 through 2012 before the American Taxpayer and Relief Act of 2012 reinstated it. Then it was repealed again by the Tax Cuts and Jobs Act (TCJA).

Key Takeaways

  • The Pease limitation prevented high-income taxpayers from whittling away at their taxable incomes by claiming large and numerous itemized deductions.
  • It limited the amount they could claim for certain itemized deductions.
  • It didn't affect all itemized deductions because some already had their own built-in restrictions.
  • It didn't affect those who claimed the standard deduction instead of itemizing, or low-income taxpayers.
  • The Pease limitation has been repealed twice, first in 2012 then again in 2017. It's no longer in effect in 2023.

What the Pease Limitation Prevented

Itemized deductions can be a somewhat tricky tax concept. You can deduct certain expenses that you've paid all year from your taxable income when you itemize. Many of these expenses are necessary things that you'd have to pay even if you couldn't claim a deduction for them, such as mortgage interest and state and local property taxes.

As an example, let's say that Taxpayer A is struggling to get by and can't afford to give any of their money to charity. But Taxpayer B regularly makes qualified charitable donations of $30,000 a year. Taxpayer B can subtract that $30,000 from their taxable income, whereas Taxpayer B can't afford to claim this tax break.

Taxpayer A might spend $2,500 a year on property taxes, while Taxpayer B spends $10,000 because they own a pricier home. Taxpayer B used to be able to shave another $10,000 a year off their taxable income, while Taxpayer A could claim only a $2,500 deduction because they can't afford a fancy home.


The more you earn, the more you can spend on these deductible expenses, so wealthier taxpayers were getting some significant tax breaks before the Pease legislation intervened.

These unfair circumstances existed until Congressman Pease got involved to put a stop to it, and the Pease limitations were implemented.

How the Pease Limitation Worked

The Pease limitation didn’t apply to all itemized deductions. Those for medical expenses, investment expenses, and some theft and casualty losses were spared, maybe because many of these deductions had their own separate built-in limitations anyway. But the deductions for mortgage interest, state and local taxes, charitable contributions, and certain miscellaneous deductions became more limited for wealthier taxpayers under the Pease limitation rules.


The Pease legislation required that you would have to subtract 3% from the affected itemized deductions you were claiming if your AGI was above a certain threshold for your filing status. The 3% applied to the difference between your AGI and this threshold.

The AGI limit for single taxpayers was $261,500 in 2017, the last year the Pease limitation was in place. You would have had to subtract $600 from your itemized deductions in these categories if you were single with an AGI of $281,500 because 3% of that additional $20,000 in income works out to $600. You could only claim $29,400 if you had $30,000 in itemized deductions.

The Limitation Cap

A few hundred dollars might not sound like a big deal when you're earning upward of $280,000 a year, but it still represents some lost tax savings. And Congress was kind in one respect: It capped the reduction at 80% overall, but this rule only helped the wealthiest taxpayers.

Your income would have to have been so significant that 3% of the difference between the threshold and your AGI exceeded 80% of the itemized deductions you could otherwise have claimed.

Adjusted Gross Income Thresholds

The Pease limitation AGI thresholds increased somewhat in 2017 from what they were in 2016 because they were indexed for inflation. Even so, they achieved what Congressman Pease intended: Higher-income individuals were affected. The limitations were based on filing status. 

  • The AGI limit for single taxpayers was $261,500 in 2017, up from $259,400 in 2016.
  • The limit for married taxpayers filing jointly was $313,800 in 2017, increased from $311,300 in 2016.
  • Heads of household were capped at $287,650 in 2017, up from $285,350 in 2016.


These calculations are based on your adjusted gross income, not your total income. Your AGI is what remains after you take certain adjustments to income on Form 1040. A whole new 1040 went into effect in the 2018 tax year, and another new 1040 was introduced in 2019.

Other Related Tax Changes

The TCJA resulted in a great many other tax code changes as well, and some of them make the elimination of the Pease limitation almost redundant. For example, many work-related miscellaneous deductions were eliminated under that tax reform anyway. Applying the Pease limitation to them no longer serves any purpose because they no longer exist.

The TCJA also imposes a ceiling of $10,000 on the deduction of property, state, and local taxes. This limit applies to the total of all three when they're added together. If you pay $20,000 in 2018, that extra $10,000 won't do you any good at tax time because you can no longer claim it. This cap serves a similar purpose to that achieved by the Pease limitation.

The mortgage interest deduction has been adjusted downward as well. It's limited to $750,000 in acquisition debt for mortgages taken out after December 14, 2017. The limit used to be $1 million. So again, the Pease limitation would only limit a tax provision that the TCJA affected anyway. Congress apparently felt that the Pease limitation and these other terms of the TCJA overlapped, serving the same purpose.

Frequently Asked Questions (FAQs)

Do taxpayers have any other option besides itemizing their deductions?

Taxpayers can claim the standard deduction for their filing status, or they can itemize their deductions on Schedule A of the Form 1040 tax return, but they can't do both. The standard deduction gives many taxpayers a better tax break.

What work-related itemized deductions were eliminated by the 2017 tax law?

Job-related expenses used to fall under the umbrella of miscellaneous itemized deductions. They were deductible to the extent that they exceeded 2% of the taxpayer's AGI. They included work-related costs such as union dues, uniforms, and work-related travel.

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  2. Congressional Research Service. "Federal Individual Income Tax Brackets, Standard Deduction, and Personal Exemption: 1988 to 2022." Page 49.

  3. Congressional Research Service. "Federal Individual Income Tax Brackets, Standard Deduction, and Personal Exemption: 1988 to 2022." Page 11.

  4. Congressional Research Service. "Federal Individual Income Tax Brackets, Standard Deduction, and Personal Exemption: 1988 to 2022." Page 12.

  5. Tax Foundation. "2017 Tax Brackets."

  6. Tax Policy Center. "How Does the Deduction for State and Local Taxes Work?"

  7. IRS. "Tax Reform Affects If and How Taxpayers Itemize Their Deductions."

  8. IRS. "It's Important for Taxpayers To Know the Difference Between Standard and Itemized Deductions."

  9. IRS. "Tax Reform Brought Significant Changes to Itemized Deductions."

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