Deductions Subject to the Phaseout

Not all deductions are affected by the phaseout of itemized deductions, but most of the larger ones are:

• home mortgage interest
• state and local taxes
• charitable contributions
• miscellaneous itemized deductions that are subject to the 2 percent limit, including employee business expenses
• federal estate tax in respect of a decedent
• impairment-related work expenses
• amortizable bond premiums on bonds acquired before 10/23/86
• unrecovered investment in a pension
• repayments of income previously taxed

The following deductions are not subject to the phaseout:

• medical and dental expenses
• gambling losses
• investment interest expenses
• nonbusiness casualty and theft losses

Note that whatever limits are applicable to the particular type of deduction (for example, the $100,000 limit on home equity loans, or the two percent limit for miscellaneous deductions) are applied first, before computing the amount of the phaseout.