Federal judge dismisses states’ challenge to $10,000 SALT cap

Julie Daurio, Producer | September 30, 2019

A federal judge has tossed out a lawsuit challenging the Trump administration’s cap on so-called SALT deductions.

New Jersey joined with New York, Connecticut and Maryland in filing suit against the U.S. Treasury and IRS in 2018.

The states argued the $10,000 limit on the amount of state and local taxes that could be deducted from someone’s federal tax liability was “an unconstitutional assault on states’ sovereign choices.”

They further argued the change — which came with the 2017 Republican tax overhaul — was causing their residents financial burden and was a way to punish Democratic-leaning states.

District judge J. Paul Oetkin acknowledged residents would face higher federal tax bills and a decline in their property values, but wrote in his opinion the states’ claim of unconstitutionality wasn’t valid.

A spokesperson for Gov. Phil Murphy said the state isn’t ending its fight against the tax policy, stating, “our administration will continue our challenge against discriminatory rulemaking by the IRS and take all necessary actions to restore full SALT deductibility for our residents.”