Governor Phil Murphy has signed legislation to help New Jersey taxpayers get around federal tax code changes that limit deductions for state and local taxes.
The new law allows towns to create charitable funds that pay for local services and lets residents get credits for up to 90 percent of their donations to reduce their property tax bill.
Murphy says New Jersey joins 33 other states that have allowed credits in exchange for charitable contributions without interference from the Internal Revenue Service.
“It is our deeply held opinion that if the IRS were to have to reconsider or review our situation, they would have to reconsider or review the other 33 state precedents that are out there. We think they would have to undo all those other precedents. That’s a pretty tall mountain to climb.”
U.S. Senator Bob Menendez sees no reason why the charitable contributions should not be deductible and will use his role on the Senate Finance Committee to defend the new law.
“The IRS Commissioner is up for his nomination and you can be sure that when he comes before the Senate Finance Committee I will be grilling him about what we and 33 other states believe we have the absolute right to do.”
Congressman Bill Pascrell says he’ll also fight to defend the plan, saying that federal courts have upheld the deductibility of similar state credits in the past.