Itemized Deduction Limitation

Itemized Deduction Limitation means:
a restriction whereby a taxpayer with an Adjusted Gross Income (AGI) in excess of a prescribed threshold is required to reduce his or her otherwise allowable itemized deductions. The required reduction equals 3% of the amount by which the taxpayer's AGI exceeds the prescribed threshold. For 1994, the prescribed threshold of a single person is $ 111,800. The threshold for subsequent years will be indexed for inflation. Otherwise allowable deductions, however, cannot be reduced by more than 80%. Further, the reduction does not apply to medical expenses, casualty and theft losses, investment interest expense, and gambling losses.