Malloy Proposes Charitable Funds To Preserve Tax Deductions

Feb 6, 2018

Connecticut Governor Dannel Malloy has released a preview of the budget proposal he’ll be presenting to state lawmakers on Wednesday. It includes a provision aimed at helping Connecticut taxpayers get around the new $10,000 federal limit on state and local property tax deductions.

Malloy says the Trump tax cut’s cap on SALT - the state and local property tax deduction - adversely affects high-tax blue states. He says in Connecticut about 181,000 taxpayers will lose the ability to deduct about $10 billion in state and local taxes from their federal tax liability. To get around that, Malloy wants to allow municipalities to create charitable funds that would support some local services. That way, local taxes above $10,000 might be considered charitable contributions eligible for federal tax deductions.

“Our goal is to help taxpayers. Some towns would be more desirous of doing that. I can imagine Greenwich, Connecticut, that has an extraordinary small tax rate, but some very valuable properties wanting to do this right away.”

Malloy says language for the legislation has already been crafted and sent to the state legislature.

“We believe this could all be done and we could save Connecticut taxpayers a good chunk of $10 billion.”

He says Connecticut would be the first state to do it.