The victories for so-called blue states have largely been symbolic. The House Ways and Means Committee will hold a hearing on possible changes to the SALT cap later this month, that could lead to legislation raising the $10,000 limit. But Senate Finance Chairman Chuck Grassley has already said he won’t take up any SALT-related bills in the Senate.

Even talking about the SALT cap could be a political liability for some Democrats, because most of the benefit goes to top earners at a time when the party’s presidential candidates are focused on income inequality and new taxes on the wealthy.

About 9% of households would benefit from a repeal of the SALT cap, according to analysis from the Urban-Brookings Tax Policy Center. About 96% of the benefit goes to the top 20% of household by income, their data found.

Skirting SALT Cap
Taxpayers in Connecticut and New York both still have options to skirt the SALT cap that Treasury didn’t address in Tuesday’s regulations. Connecticut allows owners of so-called pass-through businesses -- such as partnerships, limited liability companies and S corporations -- to take bigger federal deductions to absorb some of the hit from the SALT deduction limit. New York created a way for employers to shield their employees from the cap.

But the workarounds are narrowly tailored and don’t apply to all taxpayers. Since the tax law kept business’s SALT deductions unlimited, New York passed a law that lets companies opt in and essentially pay for their employee’s state taxes.

It’s hard to make it work practically, Jared Walczak, a senior policy analyst at the Tax Foundation said. It might be a great deal for a small company with similarly compensated employees, such as a hedge fund, but it’s a lot harder for a large company
with a wide range of salaries to make it work, he said.

“Not many companies are willing to jump into” New York’s workaround, Tom Corrie, a principal at accounting firm Friedman LLP.

Connecticut’s workaround for pass-throughs also faces hurdles. It’s open to legal challenges and IRS officials have said they are considering issuing guidance to invalidate it. A lawsuit or regulations that kill the Connecticut plan could mean that taxpayers could have to pay more state taxes than they would have in the first place, Walczak said.

Despite the dim outlook for an immediate repeal of the SALT cap, Democrats have said they won’t relent.

“The federal government is continuing its politically motivated economic assault on New York,” New York Governor Andrew Cuomo said in a press release. “We will pursue all options, including litigation, to resist this attack on our state and our taxpayers.”