From the Star Ledger:
Gov. Phil Murphy just took action to save your federal property tax break from President Donald Trump’s new tax law.
The Democratic governor signed a law Friday that gives New Jersey taxpayers a shot at getting around the Republican tax overhaul, which sets limits on how much they can deduct in state and local taxes.
The law Murphy, a frequent Trump critic, signed will soon allow New Jersey’s towns, counties and school districts to set up charitable funds that taxpayers can contribute to instead of paying property taxes directly.
Homeowners can then deduct those charitable contributions from their federal income taxes, uncapped.
“We know that President Trump and the leadership in Congress cooked this up to benefit the states that were with him, instead of treating everyone fairly, and give a windfall to the wealthiest individuals in the biggest companies,” Murphy said before signing the law at East Rutherford’s town hall.
“It is divisive, it is wrong, and we will continue to fight,” the governor added.
New Jersey has the highest property taxes in the country, averaging $8,690 last year. The state and local tax deduction helped take the edge off.
Though 61.5 percent of New Jersey households will see a tax decrease under the federal law, that’s a smaller percentage than 45 other states, according to the Tax Policy Center, a joint venture of the progressive Urban Institute and Brookings Institution.
And more than 1 in 10 New Jersey households will see their taxes rise, more than any other state, according to the group.
Murphy said Friday that Trump’s cap is “a de facto tax hike on countless New Jersey households.”
But there’s no guarantee the Internal Revenue Service will allow these deductions. The Trump administration is opposed to the workaround, saying the state and local tax deduction is an unfair subsidy for high-tax states.
Republican state lawmakers skeptical of the scheme have warned that New Jerseyans could wind up facing fines and penalties if the IRS rejects it.