High-tax states may want to reevaluate state and local taxes after a federal judge tossed a suit over a federal cap on state and local tax deductions.
New York, New Jersey, Connecticut and Maryland sued the federal government over the state and local taxes, or SALT, deduction cap of $10,000 from the 2017 tax cut law. Illinois Gov. J.B. Pritzker and governors from other high tax states had supported the suit. Pritzker said in February that not having the deduction affected 2 million people. He said most of those people earned $200,000 or less a year.
A federal judge in New York recently dismissed the challenge.
Tax Foundation Director of State Tax Policy Jared Walczak said the states had argued the cap was unconstitutional and “commandeered the states into changing their tax code into what the federal government wanted it to do.”
“The court did not find any of those arguments particularly compelling,” he said.