Supreme Court of the United States (SCOTUS ) on Monday rejected a plea by New York and a group of states, including Connecticut, New Jersey, and Maryland to overturn a $10,000 cap on federal tax deductions for state and local taxes set by Congress as part of the Trump administration’s 2017 tax overhaul.
New York and three other states had argued that the so-called SALT cap, which was enacted as part of a massive tax overhaul in 2017, violated their sovereignty.
BREAKING: SCOTUS swats away SALT cap challenge that limits tax deductions in New York, Maryland https://t.co/hlfKl6EJeN
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“The structural requirements of federalism limit Congress’s taxing authority (as outlined in Article I, Section 8 and the Sixteenth Amendment), which prevent the federal government from directly interfering with the States’ ability to generate revenue to sustain their operations,” the states wrote in a March court filing.
“The long history of federal income taxation demonstrates that Congress and the states both understood that a deduction for all or nearly all state and local property and income taxes was essential by the Constitution to preserve state sovereign taxing authority,” the states continued.
The Supreme Court gave no justification for its decision not to consider the case.
The SALT cap was enacted by Congress under the administration of former President Donald Trump, and the Biden administration continued to defend it throughout the case.
In 2021, the current Democratic-controlled House passed a bill that would temporarily raise the cap to $80,000 until 2031, when it would revert to $10,000.
Although a rival Senate plan backed by Sen. Bernie Sanders, I-Vt., would cap the tax cut by income, making it unlimited for individuals earning around $400,000 and phasing it down above that level, the Senate has yet to move on the bill.
Republicans have attacked the bill, claiming that it would benefit ultra-wealthy Americans in blue states disproportionately.
The current SALT cap will run out in 2025.