What is the 2% reduction for itemized deductions?
For folks with a relatively high level of income, the amount of itemized deductions is reduced, slightly increasing their tax burden. In 2005, this reduction was the 3% reduction. However, the law is getting rid of this reduction, so it will be going down of the next several years – for 2006 (as well as 2007), folks only need to reduce certain itemized deductions by 2% instead of 3%. For more precise information, please check out: What is the 2% reduction?