States loose court battle against SALT limit

The Tax Cuts and Jobs Act (TCJA) led to major changes to federal tax law. One example of the changes that impact taxpayers is the creation of a cap on the state and local tax (SALT) deduction taxpayers could claim on their federal tax returns. The limit, now set at $10,000, was a blow to wealthy tax payers in high tax states.

Deductions impact residents: A breakdown of the cost

Residents of high tax states often took advantage of the SALT deduction. Examples of average deductions for high tax states include:

  • Connecticut: $18,092
  • New Jersey: $19,563
  • New York: $21,779

As a result of the new law, these taxpayers could no longer deduct the full cost of their SALT payments. Instead, they can now only take, at most, a $10,000 deduction.

States fight back: attempts to thwart the limitation fail

Lawmakers of high tax states have taken action to thwart this provision. One example involved an attempt to implement a workaround. The workaround essentially allowed taxpayers to take the SALT deduction as a charitable donation. The IRS denied the workaround.

In another attempt to remove the limitation, Connecticut, Maryland, New Jersey and New York filed suit, stating the passage of this limitation exceeded Congress’ authority. The case was based on the argument the limitation was a “constitutional assault on the states’ sovereign choices.” The just dismissed the case, explaining the states had failed to show the SALT cap was an imposition on their sovereign rights as states.

The states may appeal the ruling and continue their fight to remove the SALT deduction limitation.

No Comments

Leave a comment
Comment Information
Email Our Team

Contact Us to Get Started Today

Located in the Washington, D.C area, we serve clients in the District of Columbia, Maryland and Northern Virginia, as well as across the country and overseas. For a free initial consultation, call 202-381-1261 or complete our brief online form.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Six Convenient Office Locations in and around the DC Metropolitan Area

Washington, D.C.
1050 Connecticut Ave NW #500
Washington, D.C. 20036

Phone: 202-618-1873
Fax: 888-235-8405
Washington Law Office Map

Columbia Office
10440 Little Patuxent Parkway, Suite 300
Columbia, MD 21044

Phone: 202-618-1873
Phone: 410-497-5947
Fax: 888-235-8405
Columbia Law Office Map

Annapolis Office
839 Bestgate Road
Suite 400
Annapolis, MD 21401

Phone: 202-618-1873
Phone: 410-497-5947
Fax: 888-235-8405
Annapolis Law Office Map

Fairfax Office
8280 Willow Oaks Corporate Drive
Suite 600
Fairfax, VA 22031

Phone: 202-618-1873
Phone: 703-988-4817
Fax: 888-235-8405
Fairfax Law Office Map

Rockville Office
199 E. Montgomery Avenue
Suite 100
Rockville, MD 20850

Phone: 202-618-1873
Phone: 240-599-5009
Fax: 888-235-8405
Rockville Law Office Map

Baltimore Office
400 East Pratt Street
8th Floor
Baltimore, MD 21202

Phone: 202-618-1873
Phone: 443-743-3381
Fax: 888-235-8405
Baltimore Law Office Map