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Grewal sues feds over SALT deduction cap

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Attorney General Gurbir Grewal at the Chaplain's Conference at the Trenton War Memorial in Trenton on June 12.
Attorney General Gurbir Grewal at the Chaplain's Conference at the Trenton War Memorial in Trenton on June 12. - ()

New Jersey Attorney General Gurbir Grewal is suing the Trump administration over a $10,000 cap on federal tax deductions for state and local taxes.

The federal $10,000 SALT cap deduction was part of a tax policy overhaul under the Tax Cuts and Jobs Act signed into law by President Trump in December.

The suit, which includes New York, Connecticut and Maryland as co-plaintiffs, seeks to prevent the Internal Revenue Service and U.S. Treasury from enforcing the SALT cap deduction.

“The federal government went after these states deliberately,” Grewal said in a statement Tuesday. “Treasury Secretary Steven Mnuchin even said, the point of the changes to the SALT deduction was to ‘send a message to the state governments’ that Washington wants them to change their spending policies.”

He added: “[The cap is] unprecedented and harmful. The federal government violated the constitution when it imposed new, arbitrary limits on the amount of state and local taxes that residents could deduct on their federal tax returns.”

In May, Gov. Phil Murphy signed a law allowing tax credits for charitable contributions to local governments, effectively bypassing the cap. The IRS, in response, warned taxpayers not to follow such laws said it will be closing a loophole that allowed such policies to be enacted.

Grewal said he’d also challenge those efforts.

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Daniel J. Munoz

Daniel J. Munoz


Daniel Munoz covers politics and state government for NJBIZ. You can contact him at dmunoz@njbiz.com.

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