Justices reject states' appeal over cap on tax deductibility

The Supreme Court has rejected a challenge from New York, New Jersey, Connecticut and Maryland to the 2017 tax law that capped federal tax deductions for state and local taxes

Supreme Court Water Rule (Copyright 2022 The Associated Press. All rights reserved.)

The Supreme Court on Monday rejected a challenge from New York, New Jersey, Connecticut and Maryland to the 2017 tax law that capped federal tax deductions for state and local taxes.

The lawsuit had previously been dismissed by lower courts. It argued that the Republican-led tax law, signed by then-President Donald Trump, unfairly singled out high-tax states in which Democrats predominate.

The law caps a deduction for state and local taxes, known as SALT, at $10,000. The lawsuit claimed that lawmakers crafted the provision to target Democratic states, interfering with the states' constitutionally granted taxing authority.

Legislation to raise the cap has passed the House of Representatives but not the Senate.