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States Stand By SALT Deduction Workarounds

June 12, 2019, 5:06 PM

States aren’t giving up so easily on programs to help their residents circumvent changes in federal tax law—some, like New York and New Jersey, are threatening legal action over new Treasury Department regulations.

The department June 11 issued regulations prohibiting charitable fund workarounds put in place by states to help taxpayers circumvent the 2017 tax law’s $10,000 cap on the deduction for state and local taxes, known as the SALT deduction.

States including New York, New Jersey, and Connecticut responded to the federal law by allowing taxpayers to get a state credit for donations made to newly created charitable funds,...

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