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Connecticut and New York team up to increase SALT deductions — again

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Mark Lennihan
/
AP

Connecticut and New York have revived their efforts to overturn the SALT cap — the federal deduction for state and local taxes that the Trump administration limited to $10,000 — by asking the U.S. Supreme Court to hear the case.

The states’ attorneys general, along with Maryland and New Jersey, had sued the federal government in 2018 after former President Donald Trump signed into law the Tax Cuts and Jobs Act of 2017. Before the GOP overhaul, taxpayers who itemized their deductions could write off almost all of their state and local real estate taxes.

In October, the U.S. Court of Appeals upheld a lower court’s decision to throw the case out. Now, the states have asked the Supreme Court to let the case move forward, arguing the cap was politically motivated to target Democratic-leaning states, and hurts residents in high-tax states.

"This unfair cap has already placed a significant financial burden on countless hardworking, middle-class families in New York, and in the years to come, it is expected to cost New York taxpayers more than $100 billion," New York Attorney General Letitia James said in a statement. "We filed this lawsuit to protect millions of New Yorkers from this harmful, misguided and blatantly political attack. New York will not be bullied into paying more than its fair share, and we will continue to fight back."

New York Governor Kathy Hochul called the cap “double taxation” in a statement.

“Repealing the SALT cap would not only put more money into the pockets of New York families, it would deliver a much-needed boost to New York’s economy,” she said.

On Long Island, U.S. Rep. Tom Suozzi (D-NY), who is challenging Hochul in the Democratic primary, has been a vocal advocate for increasing the SALT cap. He pushed for the $80,000 limit in the House version of the Build Back Better bill, but Senate Democrats have not yet agreed on a final bill.

Supporters of the reduced SALT cap argue the deductions disproportionately benefit high-income families.