New Jersey officials are decrying new rules from the Trump administration that aim to block high-tax states from getting around a cap on state and local deductions.
The Treasury Department's newly released rules target moves by states like New York, New Jersey and California - where residents could see substantial increases in their federal tax bills next spring because of the $10,000 cap. A dozen states, including New Jersey, have taken or are considering measures to get around the cap, mostly using deductions for charitable donations.
Gov. Phil Murphy previously signed a low that would allow towns and school districts collecting property taxes to set up charitable funds. Taxpayers would then pay property taxes to the funds and get a deductible tax credit in return. The new law does not cap charitable deductions.
The Trump administration and IRS criticized the new laws when they caught wind of them.
Gov. Murphy released a statement Thursday fighting back against the treasure department’s new rules.
"We are prepared to fight back tooth and nail against any attempts by the IRS or the Trump administration to block localities from setting up charitable funds to help New Jersey taxpayers preserve their deductibility,” he said.
Rep. Josh Gottheimer also vowed to right back, saying "We will fight these shameless rules and will continue to fight for lower taxes for New Jersey families."
His sentiments were echoed by Rep. Bill Pascrell.
"Trump wants to block our state from seeking relief to their bad policies is an outrage. None of us will take it lying down,” the congressman said in a statement.
According to the Progressive Institute on Taxation and Economics Policy, only three states deduct more from federal taxes than New Jersey: New York, Connecticut and California.
The Associated Press wire services contributed to this report.