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Lawsuit Over SALT Cap Dismissed

Justice Scales
Adobe Stock

A legal challenge to a provision of the 2017 federal tax reform law that capped state and local tax deductions at $10,000 has been dismissed by a federal court. 

New York Governor Andrew Cuomo, who has been an outspoken critic of the so-called SALT provision, says all legal options including a possible appeal will be considered after the U.S. district judge tossed out the lawsuit brought by New York state, New Jersey, Connecticut and Maryland. Governor Cuomo, a Democrat, says the loss of the tax deduction over $10,000 will cost New Yorkers $15 billion a year.

"There is no doubt in my mind that President Trump's unfair tax policy targets New York and other blue states by funding tax cuts for corporations and the rich on the backs of New Yorkers,” Cuomo said in a statement Monday. “New York is already the largest 'donor state' in the nation - paying the federal government $36 billion more than we get back every year. The SALT cap takes this gross imbalance and supercharges it, costing New Yorkers another $15 billion each year. The bottom line is this policy is unprecedented, unlawful, punitive and politically motivated - and it must be stopped. We disagree with the court's decision and are evaluating all options including appeal."

Democratic New York Attorney General Letitia James’ office released a statement after Cuomo’s office.

“We filed this lawsuit to protect our residents from the cap on the state and local tax deduction, an invasive and unprecedented attempt by the federal government to curtail our states’ constitutional rights,” James said. “We remain committed to defending our taxpayers and our state. We will continue to review the decision as we consider all of our options.” 

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