The Supreme Court rejects the SALT limit challenge from New York, New Jersey

Rep. Judy Chu, D-California, speaks during a press conference announcing the State and Local Taxes (SALT) Caucus outside the United States Capitol.

Sarah Silbiger | Bloomberg | Getty Images

The United States Supreme Court has rejected New York and three other states’ challenge to overturn the $ 10,000 limit on the federal deduction for state and local taxes, known as SALT, enacted through the Republican’s 2017 tax review.

the order denied a request from New York, Connecticut, Maryland and New Jersey to review an October to govern by the United States Court of Appeals for the Second Circuit, which rejected subjects that the SALT limit is an “unconstitutional assault” on state tax decisions.

“This Supreme Court decision underscores the fact that any changes to the SALT limit will come from an intentional act of Congress, not through the courts,” said Garrett Watson, senior political analyst at the Tax Foundation.

“The legal challenges to the CAP itself have always been a long way off, so this Supreme Court decision to refuse review of the case was not entirely unexpected,” he said.

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The SALT limit has been a sore point for high-tax states because residents cannot deduct more than $ 10,000 in state and local levies on their federal yields. And some lawmakers in these areas have campaigned for relief as part of a Congress SALT Caucus.

With a slim Democratic majority, the $ 10,000 limit was a sticking point in Build Back Better negotiations and House lawmakers passed in November $ 80,000 SALT cap until 2030 as part of their $ 1.75 trillion shopping package. However, Sen. Joe ManchinDW.Va., blocked the plan in the Senate, keeping the momentum for SALT relief.

“I expect this decision to revive some discussion about whether and how the deduction limit should be changed in the future, especially in the context of any Build Back Better package reviewed in Congress,” said Watson.

Skepticism about changes to the SALT limit in both chambers remains, which could make any legislative attempt to change the limit an uphill battle at best.

Garrett Watson

senior political analyst at the Tax Foundation

“Skepticism remains about changes to the SALT limit in both chambers, which could make any legislative attempt to change the limit an uphill battle at best,” he added.

Without an extension by Congress, the $ 10,000 SALT limit will automatically expire in 2026, along with various tax breaks by republican legislation.

Meanwhile, many states have Alternative solutions for the SALT cap for business pass-through, allowing owners to get around the limit by paying part of their state taxes through their company.

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