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IRS Says No To SALT Deduction Cap Bypass

Donkey Hotey/Flickr

The U.S. Treasury Department Thursday moved to prevent residents in high-tax states like New York from using a workaround to the $10,000 cap on state and local tax, or SALT, deductions. Republican New York Congressman John Faso had twice requested clarity on the issue.

Faso’s second letter came in April, asking the department whether New York state legislation that would convert some SALT payments to payments that might be eligible for the charitable tax deduction under federal law would be permitted.

“Even though I don’t like the limitation, it was important for taxpayers to know whether or not the proposed workaround by New York and some other states would work,” Faso says. “And today the Treasury said no.”

Faso says a letter from the Treasury came Thursday afternoon while he was touring two farms in Columbia County with the U.S. agriculture secretary. Democratic New York Governor Andrew Cuomo, meanwhile, threatened legal action over the IRS rules.

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