Phase-Out Threshold

Category: tax

Income levels where specific tax breaks or deductions begin to disappear.

The IRS hates "cliffs." Instead, they use phase-outs. As you earn more, your deductions slowly shrink until they disappear entirely. This is why you must know your exact AGI, as earning $1 more can technically trigger a $500 loss in a deduction.

Common Examples

• We timed the IRA contribution to keep our AGI below the phase-out threshold, preserving the full tax deduction for the fiscal year.
• Navigating the complex maze of phase-out thresholds is the most common reason our clients seek professional annual tax advisory services.