State & Local Government Policy, Business and Technology

Explainer: More U.S. states eye donations to evade Trump tax changes

Reuters: CHICAGO (Reuters) - Legislation that first surfaced in California to give taxpayers a way to avoid the new cap on state and local tax (SALT) deductions by making charitable donations has popped up in four more states so far, with others reviewing alternative methods.

Changes to the U.S. tax system signed into law by President Donald Trump in December have sparked a furious search in states with high income and property taxes for loopholes to help residents replicate the benefits taken away by the $10,000 cap on federal SALT deductions.

Bills in Illinois, Nebraska, Virginia and Washington are similar to the California measure, which would allow residents to donate to a new state public-purpose “excellence fund” and receive a dollar-for-dollar tax credit in return, according to the National Conference of State Legislatures.

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