In the case of Christopher H. Lunding, et ux. v. New York Tax Appeals Tribunal et al., 1997, the U.S Supreme Court ruled in favor of New York State's taxation policy that disallowed non-resident taxpayers from deducting alimony payments from their taxable income while allowing resident taxpayers to do so. The Lundings, Connecticut residents who paid taxes on income earned in New York and also paid alimony to a former spouse residing in another state, challenged this law as discriminatory against interstate commerce under the Commerce Clause of the Constitution. However, Justice Ginsburg delivered an opinion for a unanimous court stating that there was no violation because it did not impede free trade or commercial activity across state lines; rather it was simply a differential tax treatment based on residency status which is permissible under existing laws and precedents.

In the dissenting opinion for Lunding v. New York Tax Appeals Tribunal, Justice Ginsburg argued that the majority's decision was inconsistent with previous rulings on discrimination against nonresidents in state tax laws. She contended that New York's denial of an alimony deduction to nonresident taxpayers did not serve a substantial state interest and thus violated the Privileges and Immunities Clause of the Constitution. The justice pointed out that while states have some leeway in treating residents and nonresidents differently for taxation purposes, such differential treatment must be justified by significant differences between residents' and nonresidents' relationship to the taxing state’s services or economy. In this case, she saw no such justification: both resident and nonresident taxpayers contribute to their ex-spouses’ support through alimony payments; therefore denying only one group a deduction seemed arbitrary rather than based on any meaningful difference related to residency status.