D-Calif Rep. Judy Chu will speak at a press conference announcing a caucuses of state and local taxes (SALT) outside the US Capitol.
Sarah Sylbiger | Bloomberg | Getty Images
The US Supreme Court has dismissed an objection from New York and three other states to overturn the $ 10,000 limit on federal deductions for state and local taxes. It is known as the SALT enacted through the Republican Party’s 2017 tax review.
The orde Rejected October review request from New York, Connecticut, Maryland, NJ Arbitrage From the dismissed Federal Court of Appeals for the Second Circuit argument The upper limit of SALT is that it is an “unconstitutional assault” on the state’s tax decisions.
Garrett Watson, senior policy analyst at the Tax Foundation, said, “This decision by the Supreme Court emphasizes the fact that the change in the SALT limit results from the deliberate actions of Congress, not through the court.” Said.
“The legal opposition to Cap itself has always been long-lived, so this decision by the Supreme Court to refuse to review the proceedings was not entirely unexpected,” he said.
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The SALT cap is a problem for high-tax states, as state and local federal tax deductions cannot exceed $ 10,000.And some lawmakers in these areas have fought for relief as part of parliament. SALT Caucus..
The $ 10,000 limit is a challenge to buildback better negotiations, as the majority of democracy is slim, with November lawmakers in November. $ 80,000 SALT Cap by 2030 As part of their $ 1.75 trillion spending package. But Sen. Joe Manchin, DW.Va. Blocked the plan in the Senate and stopped the momentum of SALT relief.
“This decision revives the debate about whether and how the deduction limit needs to be changed, especially in the context of the Congressional revised Buildback Better Package. I’m looking forward to it, “said Watson.
There remains skepticism about changing the SALT cap in both chambers, and legislative attempts to change the cap can be a difficult battle at best.
Garrett Watson
Senior Policy Analyst, Tax Foundation
“There remains skepticism about changing SALT caps in both chambers, and legislative attempts to change caps can be a difficult battle at best,” he added.
Without an extension from Congress, the $ 10,000 SALT limit will be automatically lifted in 2026. Some tax deductions From Republican law.
In the meantime, many states SALT cap workaround For pass-through businesses, owners can bypass the restrictions by paying a portion of the state tax through the company.
Other obstacles
The SALT cap was a hot button issue in high-tax states and parliament, but there are other economic factors to consider, policy experts say.
“There was a pandemic and an economic recovery from the pandemic, which is driving current state policy making, not state or local tax deductions,” said Richard Auxier, Senior Policy Associate, Urban-Brookings Tax Policy. Says. center.
The $ 10,000 SALT limit affects wealthy homeowners with “ability to create a lot of political turmoil,” and many benefit from tax cuts and other provisions of the Employment Act. ..
According to the Tax Policy Center, if abolished, the top 20% of taxpayers may receive more than 96% of relief ReportThis affects only 9% of American households.