The US Court of Appeals for the Second Circuit on Tuesday upheld a provision of President Trump’s 2017 Tax Cuts and Jobs Act capping the state and local tax (SALT) deduction at $10,000.

The deduction, which has existed in some form since the inception of the modern tax code, allows individuals to deduct the amount they pay in state and local taxes from their adjusted gross income. The decision to cap this deduction at $10,000 disproportionately affects taxpayers in states with high income taxes.

This lawsuit was brought by the states of New York, Connecticut, Maryland, and New Jersey, which are among the states with the highest state and local taxes. The states argued that capping the SALT deduction unconstitutionally coerced “disfavored” states to cut their taxes.

The plaintiff states lost the case in trial court after Southern District of New York Judge Paul Oetken granted the federal government’s motion to dismiss in September 2019. The trial court judge found that there was no constitutional provision prohibiting Congress from departing from its long-standing policy of allowing taxpayers to claim an uncapped SALT deduction and does not infringe on states’ rights to tax their own residents.

The plaintiff states appealed the case to the Second Circuit, which found that the states had failed to show that their injuries were great enough to be coercive. The court further noted that the SALT cap is one of countless federal laws whose burdens are unevenly distributed among the states, although such a disproportionate effect does not rise to the level of a constitutional violation.

Congress is currently considering whether to remove the SALT cap in President Biden’s spending plan, which includes a number of changes to the tax code, including significant tax increases on the richest Americans.