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As part of the Tax Cuts and Jobs Act of 2017 (TCJA) a cap was enacted to limit state and local tax (SALT) deductions for individuals to $10,000 ($5,000 for married filing separate returns). Following the enactment of the TCJA, there have been multiple challenges by states to SALT cap. Most recently, a Federal District Court Judge has dismissed a lawsuit by the States of New York, New Jersey, Connecticut, and Maryland that was seeking to challenge the SALT cap on the basis that it violated constitutional protections.

The states raised two arguments in their attempt to prove that the cap was unconstitutional. First, the ability of Congress to limit the deduction of SALT would unbalance state-federal power and second that the cap was an unlawful attempt to unduly influence state tax policies. Upon reviewing the case, the court found that neither argument was proven to rise to the level of making the SALT cap unconstitutional. 

The primary reason that the arguments failed is that Congress has absolute power to tax and grant exemptions from Federal taxes as prescribed by Section 8 of the US Constitution. Additionally, the court ruled that SALT deductions have no protections under the Constitution nor special legislative history. The SALT deduction was first introduced in 1913 and has been amended in 1964 and 1986, before the 2017 cap.

The court also ruled that the SALT cap did not unduly influence the states' abilities to pursue their preferred tax policies. The enactment of taxes or exemptions from taxes can be used by Congress to influence federally-preferred policies so long as the actions do not violate or prevent the states from pursuing their preferred policies. As a result of not impeding states from pursuing their preferred policies, there was no constitutional basis for challenging the SALT cap.