Gurbir S. Grewal, New Jersey attorney general, speaks at Seton Hall University School of Law in February 2018

Officials from New York, New Jersey and other states are seeking to appeal a September federal court decision that upheld the U.S. government's new cap on how much taxpayers can deduct in state and local taxes, which was enacted as part of the country's major tax overhaul nearly two years ago. The new filing comes almost two months after a federal judge, in September, upheld that part of the law, saying it was within the authority of Congress to establish the cap.

The SALT cap, approved by Congress as part of the Tax Cuts and Jobs Act of 2017, capped the amount taxpayers can deduct in state and local taxes, or SALT, at $10,000. Federal law did not previously place a limit on those deductions.

Gov. Phil Murphy said in a statement Tuesday that the Trump administration "continues to use the IRS as a political weapon which affects thousands of hardworking residents of New Jersey and similar states."

Attorney General Gurbir Grewal said in a statement: "The federal government acted unlawfully when it imposed arbitrary and unprecedented limits on the tax deduction for state and local taxes, and it harmed residents all across our state when it did so."

New York Gov. Andrew Cuomo said Tuesday that attorneys for New York are still of the position that the law was influenced by politics, rather than a choice in policy from Republican lawmakers in Congress.

"The Trump Administration's SALT policy is retribution politics—plain and simple," Cuomo said.  "New York is already the nation's leader in sending more tax dollars to Washington than we get back every year, and we will not allow this administration to pick the pockets of hard-working New Yorkers to fund tax cuts for corporations and send even more money to red states."

The cap was expected to particularly affect high-tax areas where state and local tax bills regularly exceed $10,000 due to property taxes.

Cuomo also warned last year that the cap could result in lost tax revenue for the state. Individuals with high-value homes could choose to relocate, or establish a permanent residence in a nearby state with lower taxes, he said, essentially removing part of the state's tax base.

The notice of appeal was brought Tuesday by the New York Attorney General's Office, which led the lawsuit against the SALT cap last year, along with Grewal's office and attorneys general from Connecticut and Maryland. 

They've argued the law will force states to reevaluate their own tax structure and budgeting policies to accommodate the new cap. With lost revenue, and a heavier burden on some residents, states will have to adjust their own finances as a result, they've argued.

New York Attorney General Letitia James said the law has already had an impact in New York. "New York will not be bullied into paying more in taxes or changing its vital public investments because of Congress and the president's partisan choices," James said.

In his decision upholding the law in September, U.S. District Judge J. Paul Oetken of the Southern District of New York agreed that states may have to adjust their own fiscal practices to accommodate the new federal law—but he said that was perfectly legal. 

"The SALT cap simply requires the States to either exercise their sovereign powers—howsoever they wish—to avert or assuage the cap's effects or else suffer the uncertain budgetary effects of doing nothing," Oetken wrote. 

"If being put to such an open-ended choice is coercion, it will be the rare piece of federal legislation that comports with the Tenth Amendment," he continued.

The states' appeal is seeking to have the U.S. Court of Appeals for the Second Circuit interpret the law's constitutionality differently. She views the SALT cap as an unconstitutional federal interference into the government authority of states.

The notice of appeal is the first step to having the litigation heard by the appellate court. That will be followed by filings and arguments, meaning a final decision will likely not come soon.

Representatives from the U.S. Treasury Department, which is the target of the lawsuit, did not immediately return a request for comment on the appeal Tuesday.