Since the Tax Cuts and Jobs Act imposed a $10,000 limit on the SALT deduction, or amount taxpayers could deduct in state and local taxes on their federal tax return, several states have been working at loopholes and new deductions for taxpayers.
Four states – Connecticut, Maryland, New Jersey, and New York – have filed a federal lawsuit to eliminate the cap. New York, Connecticut, and New Jersey have provided a charitable fund credit against real property tax, and several other states have introduced legislation to this effect.
At the federal level, the IRS has proposed a new series of regulations that would limit the states’ ability to work around the SALT cap. The proposed rule holds that all charitable contributions claimed as deductions must be reduced by the amount of corresponding credits. The rule is currently in its 45-day public comment period ending October 11th, 2018.
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