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U.S. appeals court rejects challenge to cap on state, local tax deductions By Reuters

by Mike Robinson

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NEW YORK (Reuters), -A Federal Appeals Court rejected on Tuesday attempts by four Democratic-leaning U.S. States to overturn the decision of former Republican President Donald Trump to limit federal deductions from state and local taxes.

With a decision of 3-0, the Second U.S. Circuit Court of Appeals, Manhattan, ruled that the federal government was authorized to impose a $10,000 limit on state and local taxes so households can write off federal tax returns.

New York, Connecticut and Maryland are disappointed by the decision. They had challenged SALT caps that were implemented in 2017 as part of $1.5 trillion tax reform.

The law reduced taxes on wealthy Americans as well as lowered the corporate tax rate. Trump signed it following approval on a party-line vote from the Republican-controlled Congress.

Since the creation of the U.S. income taxes system more than 100 years ago, SALT has been available.

Capping the deduction is unfairly affected by high-tax states. New York estimates that its taxpayers will pay $121 million more federal taxes between 2018 and 2025.

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