The state and local tax deduction, known as SALT, will stay capped at $10,000 after the U.S. Supreme Court decided this week not to hear a lawsuit challenging it.
Connecticut, New York, Maryland and New Jersey — all Democratic-led states with high taxes — had sued the federal government four years ago over the $10,000 SALT cap, which limits how much local tax can be deducted from federal returns. The cap was part of the Trump administration’s tax overhaul in 2017. The states said the cap is politically motivated and called it an “unconstitutional assault” on their sovereignty.
The Supreme Court has rejected the states’ request to hear their case, meaning a lower court ruling that kept the cap in place still stands.
Supporters of the $10,000 cap say larger deductions only benefit high-income families.
New York Governor Kathy Hochul said she’s disappointed by the decision.
“Leaders in the White House and Congress have the power to undo the damage caused by the Republican tax plan and restore the full SALT deduction to help middle-class New Yorkers,” she said in a statement, even though the Biden administration did not support the states’ efforts to repeal the cap.
