History of phaseouts of itemized deductions and personal exemptions

Two provisions of the Omnibus Budget Reconciliation Act of 1990 raised taxes on high-income taxpayers by phasing out personal exemptions (termed “PEP”) and limiting their itemized deductions (“Pease”). The Omnibus Budget Reconciliation Act of 1993 made both provisions permanent. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) reduced out both provisions by one-third in 2006 and 2007 and two-thirds in 2008 and 2009 with complete repeal in 2010. The scheduled sunset of EGTRRA will resurrect both PEP and Pease in 2011.