On Sept. 30, a federal district court dismissed a challenge by four states (New York, Connecticut, Maryland and Jersey) to the $10,000 cap on the federal state and local tax (SALT) deduction that was created by the Tax Cuts and Jobs Act. (New York et. al. v. Mnuchin, No. 18-CV-6427). The states alleged that the SALT cap “violates the federalism principles that undergird the U.S. Constitution.” They pointed out that the cap will result in a significant increase to federal tax bills of residents in their states and that it disproportionately affects the residents of high-tax states whose state and local taxes exceed the $10,000 cap. And, they alleged that Republican legislators and the Republican president intended this differential result to force states to provide a disincentive for these states to impose high tax rates.New Jersey Challenges SALT Cap Earlier this week, the federal courts ruled against a lawsuit initiated by New Jersey and three other states challenging the $10,000 State and Local Tax Deduction (SALT) cap. The courts ruled against the lawsuit, which argued the cap was unconstitutional. It is unclear whether New Jersey and the other states will appeal this decision. New Jersey Realtors® met with Rep. Mikie Sherrill to discuss the importance of reinstating the full deduction due to the high cost-of-living in New Jersey.