The state Division of Local Government Services adopted regulations to implement a “SALT” deduction workaround that Gov. Phil Murphy and U.S. Rep. Josh Gottheimer (D-N.J.) introduced earlier this year.
The workaround emerged as a way to potentially undo the $10,000 state and local tax deduction cap set in place by the federal government. The cap has been projected to be especially hurtful for New Jersey residents and small business owners, who typically deduct more than that — in some cases, more than double.
Towns, counties and school districts in New Jersey can establish charitable contribution funds to collect taxes for education, emergency operations, libraries, trash pick-up, road repair and other local services. In turn, property owners may receive a credit of up to 90 percent of their contribution, deductible as a charitable expense.
The workaround, though, may be short-lived, because the IRS has proposed rules limiting such a credit to 15 percent.
If you have any questions or if you would like more information, contact Fred Schutz at (856) 722-5300 ext. 201 or Dave Gill at ext. 210.