Internal Revenue Code · 26 U.S.C.
§ 67. 2-percent floor on miscellaneous itemized deductions
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 67
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Added
- October 22, 1986 by Pub. L. 99–514
- Last amended
- July 4, 2025 by Pub. L. 119–21
- Amendments
- 7 dated changes in the source credit
- Length
- 8 subsections · 983 words · about 4 min to read
- Defines
- 4 terms
- Cross-references
- cites 16; cited by 7 Code sections and 17 other regulations
- Regulations
- 5 issued under this section
In the case of an individual, the miscellaneous itemized deductions for any taxable year shall be allowed only to the extent that the aggregate of such deductions exceeds 2 percent of adjusted gross income.
The Secretary shall prescribe regulations which prohibit the indirect deduction through pass-thru entities of amounts which are not allowable as a deduction if paid or incurred directly by an individual and which contain such reporting requirements as may be necessary to carry out the purposes of this subsection.
Paragraph (1) shall not apply with respect to any publicly offered regulated investment company.
The Secretary may by regulation decrease the minimum shareholder requirement of clause (i)(III) in the case of regulated investment companies which experience a loss of shareholders through net redemptions of their shares.
This section shall be applied before the application of the dollar limitation of the second sentence of section 162(a) (relating to trade or business expenses).
(Added Pub. L. 99–514, title I, § 132(a), Oct. 22, 1986, 100 Stat. 2113; amended Pub. L. 100–647, title I, § 1001(f), title IV, § 4011(a), Nov. 10, 1988, 102 Stat. 3351, 3655; Pub. L. 101–239, title VII, § 7814(f), Dec. 19, 1989, 103 Stat. 2414; Pub. L. 103–66, title XIII, § 13213(c)(2), Aug. 10, 1993, 107 Stat. 474; Pub. L. 105–277, div. J, title IV, § 4004(b)(1), Oct. 21, 1998, 112 Stat. 2681–910; Pub. L. 106–554, § 1(a)(7) [title III, § 319(2)], Dec. 21, 2000, 114 Stat. 2763, 2763A–646; Pub. L. 115–97, title I, § 11045(a), Dec. 22, 2017, 131 Stat. 2088; Pub. L. 119–21, title VII, § 70110(a), (b), July 4, 2025, 139 Stat. 164.)
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
Regulations under this section
Treasury regulations (26 CFR) issued under § 67
- § 1.67-1T 2-percent floor on miscellaneous itemized deductions (temporary).
- § 1.67-2T Treatment of pass-through entities (temporary).
- § 1.67-3 Allocation of expenses by real estate mortgage investment conduits.
- § 1.67-3T Allocation of expenses by real estate mortgage investment conduits (temporary).
- § 1.67-4 Costs paid or incurred by estates or non-grantor trusts.
From our articles, not part of the law
Articles that cite this section
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 16 other sections
- § 163 Interest
- § 164 Taxes
- § 165(a) Losses
- § 170 Charitable, etc., contributions and gifts
- § 642(c) Special rules for credits and deductions
- § 213 Medical, dental, etc., expenses
- § 691(c) Recipients of income in respect of decedents
- § 1341 Computation of tax where taxpayer restores substantial amount held under claim of right
- § 72(b)(3) Annuities; certain proceeds of endowment and life insurance contracts
- § 171 Amortizable bond premium
- § 216 Deduction of taxes, interest, and business depreciation by cooperative housing corporation tenant-stockholder
- § 162 Trade or business expenses
- § 190(b)(3) Expenditures to remove architectural and transportation barriers to the handicapped and elderly
- § 651 Deduction for trusts distributing current income only
- § 661 Deduction for estates and trusts accumulating income or distributing corpus
- § 62(a)(2)(D) Adjusted gross income defined
Cited by 7 Code sections
- § 56(b)(1)(A)(i) Adjustments in computing alternative minimum taxable income
- § 162(o)(2) Trade or business expenses
- § 302(b)(5) Distributions in redemption of stock
- § 562(c)(1) Rules applicable in determining dividends eligible for dividends paid deduction
- § 642(b)(2)(C)(i)(II) Special rules for credits and deductions
- § 1411(a)(2)(B)(i) Imposition of tax
- § 6654(d)(1)(C)(iii) Failure by individual to pay estimated income tax
Cited in 17 regulations not issued under it
- § 1.1(i)-1T Questions and answers relating to the tax on unearned income certain minor children (Temporary).
- § 1.30D-2 Definitions for purposes of section 30D.
- § 1.62-1T Adjusted gross income (temporary).
- § 1.62-2 Reimbursements and other expense allowance arrangements.
- § 1.132-5 Working condition fringes.
- § 1.148-5 Yield and valuation of investments.
- § 1.162-1 Business expenses.
- § 1.171-2 Amortization of bond premium.
- § 1.469-2T Passive activity loss (temporary).
- § 1.642(h)-2 Excess deductions on termination of an estate or trust.
- § 1.642(h)-5 Examples.
- § 1.1275-4 Contingent payment debt instruments.
- § 1.1366-1 Shareholder's share of items of an S corporation.
- § 1.1411-0 Table of contents of provisions applicable to section 1411.
- § 1.1411-1 General rules.
- § 1.1411-3 Application to estates and trusts.
- § 1.1411-4 Definition of net investment income.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 119–21Parts changed in 2025: (b)(13) (g) (h)
- Amended by Pub. L. 115–97Parts changed in 2017: (g)
- Amended by Pub. L. 106–554Parts changed in 2000: (f)
- Amended by Pub. L. 105–277Parts changed in 1998: (b)(3)
- Amended by Pub. L. 103–66Parts changed in 1993: (b)(6)
- Amended by Pub. L. 101–239Parts changed in 1989: (c)(4)
- Amended by Pub. L. 100–647Parts changed in 1988: (b)(4) (c) (e) (f)
- Added by Pub. L. 99–514
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter B Computation of Taxable Income
- Part I DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE INCOME, ETC.
Nearby sections
- § 63 Taxable income defined
- § 64 Ordinary income defined
- § 65 Ordinary loss defined
- § 66 Treatment of community income
- § 67 2-percent floor on miscellaneous itemized deductions
- § 68 Overall limitation on itemized deductions
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
References in Text
Section 4 of the Securities Act of 1933, referred to in subsec. (c)(2)(B)(i)(I), is classified to section 77d of Title 15, Commerce and Trade.
Amendments
2025—Subsec. (b)(13). Pub. L. 119–21, § 70110(b)(1), added par. (13).
Subsec. (g). Pub. L. 119–21, § 70110(b)(2), added subsec. (g). Former subsec. (g) redesignated (h).
Pub. L. 119–21, § 70110(a), substituted “beginning after 2017” for “2018 through 2025” in heading and struck out “, and before January 1, 2026” after “December 31, 2017” in text.
Subsec. (h). Pub. L. 119–21, § 70110(b)(2), redesignated subsec. (g) as (h).
2017—Subsec. (g). Pub. L. 115–97 added subsec. (g).
2000—Subsec. (f). Pub. L. 106–554 substituted “the second sentence” for “the last sentence”.
1998—Subsec. (b)(3). Pub. L. 105–277 substituted “for casualty or theft losses described in paragraph (2) or (3) of section 165(c) or for losses described in section 165(d)” for “for losses described in subsection (c)(3) or (d) of section 165”.
1993—Subsec. (b)(6) to (13). Pub. L. 103–66 redesignated pars. (7) to (13) as (6) to (12), respectively, and struck out former par. (6) which read as follows: “the deduction under section 217 (relating to moving expenses),”.
1989—Subsec. (c)(4). Pub. L. 101–239 struck out par. (4) which read as follows: “Termination.—This subsection shall not apply to any taxable year beginning after December 31, 1989.”
1988—Subsec. (b)(4). Pub. L. 100–647, § 1001(f)(2), substituted “deductions” for “deduction” and inserted before comma at end “and section 642(c) (relating to deduction for amounts paid or permanently set aside for a charitable purpose)”.
Subsec. (c). Pub. L. 100–647, § 4011(a), amended subsec. (c) generally. Prior to amendment subsec. (c) read as follows: “The Secretary shall prescribe regulations which prohibit the indirect deduction through pass-thru entities of amounts which are not allowable as a deduction if paid or incurred directly by an individual and which contain such reporting requirements as may be necessary to carry out the purposes of this subsection. The preceding sentence shall not apply—
“(1) with respect to cooperatives and real estate investment trusts, and
“(2) except as provided in regulations, with respect to estates and trusts.”
Pub. L. 100–647, § 1001(f)(4), amended last sentence generally. Prior to amendment, last sentence read as follows: “The preceding sentence shall not apply with respect to estates, trusts, cooperatives, and real estate investment trusts.”
Subsec. (e). Pub. L. 100–647, § 1001(f)(3), amended subsec. (e) generally. Prior to amendment, subsec. (e) read as follows: “For purposes of this section, the adjusted gross income of an estate or trust shall be computed in the same manner as in the case of an individual, except that the deductions for costs which are paid or incurred in connection with the administration of the estate or trust and would not have been incurred if the property were not held in such trust or estate shall be treated as allowable in arriving at adjusted gross income.”
Subsec. (f). Pub. L. 100–647, § 1001(f)(1), added subsec. (f).
Statutory Notes and Related Subsidiaries
Effective Date of 2025 Amendment
Pub. L. 119–21, title VII, § 70110(c), July 4, 2025, 139 Stat. 164, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.”
Effective Date of 2017 Amendment
Pub. L. 115–97, title I, § 11045(b), Dec. 22, 2017, 131 Stat. 2088, provided that: “The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2017.”
Effective Date of 1998 Amendment
Pub. L. 105–277, div. J, title IV, § 4004(c)(2), Oct. 21, 1998, 112 Stat. 2681–911, provided that: “The amendment made by subsection (b)(1) [amending this section] shall apply to taxable years beginning after December 31, 1986.”
Effective Date of 1993 Amendment
Amendment by Pub. L. 103–66 applicable to expenses incurred after Dec. 31, 1993, see section 13213(e) of Pub. L. 103–66 set out as a note under section 62 of this title.
Effective Date of 1989 Amendment
Amendment by Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title.
Effective Date of 1988 Amendment
Amendment by section 1001(f) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Pub. L. 100–647, title IV, § 4011(b), Nov. 10, 1988, 102 Stat. 3656, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1987.”
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1986, see section 151(a) of Pub. L. 99–514, set out as an Effective Date of 1986 Amendment note under section 1 of this title.
1-Year Delay in Treatment of Publicly Offered Regulated Investment Companies Under 2-Percent Floor
Pub. L. 100–203, title X, § 10104(a), Dec. 22, 1987, 101 Stat. 1330–386, provided that:
“(1) General rule.— Section 67(c) of the Internal Revenue Code of 1986 to the extent it relates to indirect deductions through a publicly offered regulated investment company shall apply only to taxable years beginning after December 31, 1987.“(2) Publicly offered regulated investment company defined.— For purposes of this subsection—“(A) In general.— The term ‘publicly offered regulated investment company’ means a regulated investment company the shares of which are—“(i) continuously offered pursuant to a public offering (within the meaning of section 4 of the Securities Act of 1933, as amended (15 U.S.C. 77a to 77aa) [15 U.S.C. 77d]),“(ii) regularly traded on an established securities market, or“(iii) held by or for no fewer than 500 persons at all times during the taxable year.“(B) Secretary may reduce 500 person requirement.— The Secretary of the Treasury or his delegate may by regulation decrease the minimum shareholder requirement of subparagraph (A)(iii) in the case of regulated investment companies which experience a loss of shareholders through net redemptions of their shares.”