Salt CAP Showdown? Four States Argue Against SALT Cap

The recent changes to the federal tax system have brought cheers from some and shouts from others. The SALT cap which placed a $10,000 limit on the amount of state and local taxes an individual can deduct from their federal return is in the “shout” category.

Salt Cap Showdown?

Four states have sued the current administration over the SALT Cap. New York, New Jersey, Connecticut, and Maryland. These states argue that the SALT Cap amounts to an infringement of Constitutionally protected state’s rights.

Not surprisingly, these four states have some of the highest state tax burdens in the country.

The SALT Cap looks to more severely impact states with already high state and local taxes. Supporters of the reform argue that the measure should motivate states with high taxes to figure out a way to lower them, thus easing the tax burden on their residents.

Conversely, detractors argue that the SALT cap interferes with state’s rights as guaranteed in the Constitution.

According to the complaint, filed Tuesday in Manhattan federal court, the new cap on the so-called SALT deduction will make it more difficult for the four states to maintain their taxation and fiscal policies, thus “hobbling their sovereign authority to make policy decisions without federal interference.”

Whatever the result, it is unlikely to be resolved by the time 2018 taxes are due next year. The SALT cap is currently in place and many states will feel that effect come tax time. There is already a growing trend of individuals leaving high-tax states in search of an easier cost of living. Whether the new tax structure hastens that exodus remains to be seen.

Location Matters

With any matter dealing with taxes, location is a large factor in determining cost of living. State and local taxes vary from state to state and city to city. When determining cost of living, not all localities are created equally.

That’s why City vs City calculates costs at the zip code level. Using locally curated data, City vs City determines the true cost of living in your city. What’s more, you can compare your costs against another city of your choosing. As a result, you’ll see a side by side comparison of costs and see how your expenses change.

If you’re considering a move, don’t make a move without downloading City vs City first.