States sue over state and local tax deduction cap
 

States sue over state and local tax deduction cap

The states of New York, Connecticut, Maryland, and New Jersey have sued the U.S. government in federal court, seeking declaratory and injunctive relief to invalidate the $10,000 limit on state and local tax deductions that was enacted as part of P.L. 115-97, known as the Tax Cuts and Jobs Act (TCJA) (New York v. Mnuchin, No. 18-cv-6427 (S.D.N.Y. 7/17/18) (complaint for declaratory and injunctive relief)).

Under the TCJA, individuals are allowed to deduct up to $10,000 ($5,000 for married taxpayers filing separately) in state and local income or property taxes. The states' complaint argues that this "new cap effectively eviscerates the SALT [state and local tax] deduction," (complaint, p. 1), noting that "Congress has included a deduction for all or a significant portion of state and local taxes in every tax statute since the enactment of the first federal income tax in 1861" (id.). Read more on the Journal of Accountancy.