Understanding the OBBB New Limit on Itemized Deductions for 2026 and Beyond

Prior to the 2017 TCJA reforms, the Pease limitation served to limit the value of itemized deductions for higher income taxpayers. While the TCJA merely suspended the Pease limitation, the 2025 OBBB, made the repeal permanent. The OBBB also created a new cap on itemized deductions. Starting in 2026, a new limit reduces the itemized deductions (including the SALT deduction) by 2/37 of the lesser of the taxpayer’s (1) total itemized deductions or (2) amount of taxable income exceeding the 37% rate bracket. The new limit does not apply when calculating the Section 199A QBI deduction, which was also made permanent under the OBBB. For more information on the limitations on itemized deductions, visit Tax Facts Online. Read More: Link to Q8528. Note: Q is updated.