Lawsuit Would Stop Limits To State And Local Tax Deductions

(File Photo)

TRENTON – New Jersey is joining three other states – Maryland, Connecticut, and New York – to sue the federal government over its new cap on certain deductions.

The State Attorney’s General Office has joined a lawsuit brought against the Internal Revenue Service and Treasury Department over the $10,000 cap on the federal tax deduction for state and local taxes (SALT). The states not only want the feds to not enforce that cap, but to have the cap declared invalid.

Taxpayers who itemized their returns could deduct state and local income, property and sales taxes from their federal tax liability. Under the new law, they can now only deduct up to $10,000 for those taxes. The suit claims the action is an attempt to coerce states into changing their spending policies, and that locally, it will hurt homeowners and depress home values.