“The Tax Cuts and Jobs Act,” Pub. L. No. 115-97, limits an individual’s deduction under IRC Section 164 for the total amount of state and local taxes (SALT) paid during the calendar year to $10,000 ($5,000 for a married individual filing a separate return). State and local tax payments exceeding those amounts aren’t deductible. This new limitation applies to taxable years beginning after Dec. 31, 2017, and before Jan. 1, 2026.

State Law Workarounds

In response to this new limitation, New York has enacted laws allowing its taxpayers to make transfers to funds controlled by state or local governments, or other transferees specified by the state, in exchange for credits against the state or local taxes that taxpayers are required to pay. Similar legislation has been enacted in New Jersey and Connecticut, and is pending in other high-income and high property tax states.