One Big Beautiful Bill (OB3) Itemized Deduction Limitation

This provision begins in 2026.

Itemized deductions begin to phase out when taxable income exceeds the dollar amount at which the 37% tax bracket begins.  This is the highest tax bracket.  So, basically, this means that your itemization begins to phase out once you reach the highest tax bracket of 37% ($626,350 / $751,600).

The phase out reduces the itemized deduction amount by 2/37 (or 5.405…..%) of the amount of taxable income that is in the 37% tax bracket for your particular filing status.  This phaseout does not apply when calculating the deduction for QBID.