Tax reform has limited the federal itemized deduction for state income and local government taxes (including property taxes), collectively referred to as the SALT deduction, to $10,000 a year. This set off a firestorm of protests from the capitals of states with high state income and property taxes. Many called it political retribution by the Republican-controlled Congress against blue states.
As it turns out, CA, CT, NJ and NY are among the states with the nation’s highest combined state income and property taxes, and they happen to be blue states. As a result, the legislatures in these states have passed or are working on legislation at the state level to circumvent the federal $10,000 limit on SALT deductions by transforming tax deductions into charitable deductions through some clever legislation.
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