A resolution (S. J. Res. 50) to nullify the IRS rules intended to block state workarounds regarding the Tax Cuts and Jobs Act (TCJA) $10,000 state and local tax (SALT) deduction limit was defeated in the Senate on October 23. The vote was 43-52.

The regulations under IRC Section 170 (TD 9864), proposed in 2018 and finalized this year, provide rules governing the availability of the charitable contribution deduction when a taxpayer receives or expects to receive a corresponding state or local tax credit. Treasury has said, "without the regulations taxpayers would be able to use state tax credit programs to circumvent the TCJA limit."

The $10,000 SALT limit and the regulations shutting down state workarounds have come under fire mostly from Democratic members from high-tax states. Senate Democratic leader Chuck Schumer (D-NY), who sponsored the resolution voted on today, said, "The Trump-Republican tax-bill was a complete and total betrayal of the middle class, and these new IRS rules are yet another devastating blow to working families across the country."

Some Democratic members support the SALT deduction cap. Senator Michael Bennet (D-CO), a Finance Committee member, said in a floor speech that the beneficiaries of the resolution would be higher-income Americans and that the revenue required to repeal the cap would be better spent on working-class priorities.

Senate Majority Leader Mitch McConnell (R-KY) said that undoing the rules to block the workarounds would mostly benefit high-income residents of states like New York and California, and that the "middle-class Kentuckians I represent have zero interest" in subsidizing the tax bills of such residents.

The Senate vote was the latest in a series of votes using the authority provided in the Congressional Review Act and intended to highlight Senate Democrats' charge that Majority Leader McConnell has turned the Senate into a "legislative graveyard." They will soon also force a vote in the Senate on a resolution to save pre-existing condition protections, according to a release.

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