The Tax Cuts and Jobs Act, Pub. L. No. 115-97, limits an individual’s deduction under IRC §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 2018 through 2025.

State law workarounds. Responding to this new limitation, New York, New Jersey, Connecticut and Maryland enacted laws allowing their 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.