Limitation on tax benefit of itemized deductions

(a) In general Section 68 is amended to read as follows: (a) In general In the case of an individual, the amount of the taxpayer’s itemized deductions shall be reduced by the sum of— (1) 5/37 of the lesser of— (A) the amount of the deduction allowable to the taxpayer under section 164 for such taxable year (determined without regard to this section), or (B) the excess (if any) of— (i) the taxpayer’s taxable income for such taxable year (determined without regard to this section and increased by the amount of the taxpayer’s itemized deductions), over (ii) the dollar amount at which the 37 percent rate bracket under section 1 begins with respect to the taxpayer, plus (2) 2/37 of the lesser of— (A) so much (if any) of the taxpayer’s itemized deductions as exceed the amount described in paragraph (1)(A), or (B) the excess (if any) of— (i) the amount described in subparagraph (1)(B)(i), over (ii) the sum of the amounts described in paragraphs (1)(A) and (1)(B)(ii). (b) Itemized deductions For purposes of subsection (a), any reference to the taxpayer’s itemized deductions shall be treated as reference to such deductions determined without regard to this section. (c) Coordination with other limitations This section shall be applied after the application of any other limitation on the allowance of any itemized deduction.. (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2025.

(a) In general Section 68 is amended to read as follows: (a) In general In the case of an individual, the amount of the taxpayer’s itemized deductions shall be reduced by the sum of— (1) 5/37 of the lesser of— (A) the amount of the deduction allowable to the taxpayer under section 164 for such taxable year (determined without regard to this section), or (B) the excess (if any) of— (i) the taxpayer’s taxable income for such taxable year (determined without regard to this section and increased by the amount of the taxpayer’s itemized deductions), over (ii) the dollar amount at which the 37 percent rate bracket under section 1 begins with respect to the taxpayer, plus (2) 2/37 of the lesser of— (A) so much (if any) of the taxpayer’s itemized deductions as exceed the amount described in paragraph (1)(A), or (B) the excess (if any) of— (i) the amount described in subparagraph (1)(B)(i), over (ii) the sum of the amounts described in paragraphs (1)(A) and (1)(B)(ii). (b) Itemized deductions For purposes of subsection (a), any reference to the taxpayer’s itemized deductions shall be treated as reference to such deductions determined without regard to this section. (c) Coordination with other limitations This section shall be applied after the application of any other limitation on the allowance of any itemized deduction.. (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2025.