Treasury Issues Proposed Regulations Addressing Charitable Deductions for State and Local Tax Credit Contributions

The Treasury Department recently issued proposed regulations addressing the availability of charitable deductions when taxpayers receive or expect to receive corresponding state or local tax credits for contributions.  The proposed regulations require a taxpayer who makes a contribution to a charitable organization to reduce his charitable deduction by any state or local tax credit that he receives or expects to receive. Taxpayers have traditionally been allowed itemized deductions for paying state and local taxes.  The Tax Cuts and Jobs Act enacted last year, however, caped the deduction for payments of state and local taxes at $10,000.  This cap hits taxpayers in high tax states like New York, New Jersey, and California hardest because many taxpayers in those states pay over $10,000 in state and local taxes.  These states have attempted to circumvent the $10,000 cap by considering or passing new state and local tax credit programs.  The programs give…

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