Murphy signs bill allowing NJ homeowners to get around tax deduction caps

David Madden
May 04, 2018 - 12:55 pm
Close up U.S. taxes papers

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EAST RUTHERFORD, N.J. (KYW Newsradio) -- New Jersey Gov. Phil Murphy has signed legislation that will help many property taxpayers hammered by the Trump Administration's tax reform package.

When the feds capped the deduction for state and local taxes at $10,000, high-taxed states like New Jersey took a hit. The governor insists his state will not take that lying down.

"We are taking a step to restore the property tax relief that the new federal law is set to take away," Murphy told attendees at the bill signing ceremony in East Rutherford.

This measure will allow homeowners to pay their local taxes through charitable funds set up by municipalities. The governor said failing to take this action would cost the average homeowner an average of over $8,000.

"It is, to be clear, a de facto tax hike on countless New Jersey households," Murphy added. "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 to give a windfall to the wealthiest individuals and the biggest companies."

Charitable donations are not capped, but the IRS has already suggested they might try to limit that. Members of New Jersey's congressional delegation promise to fight on behalf of the new law.

Thirty-three other states allow the charitable loophole in one form or another. Murphy concedes the specifics are still being worked out, and municipalities will be kept in the loop as the mechanics of this new legislation are put in place.