The Internal Revenue Department (IRS) issued final regulations this week that effectively blocked the effort by some states to get around the $10,000 cap on state and local tax (SALT) deductions imposed by the Tax Cuts and Jobs Act back in 2017. The workarounds, which allowed – and in most cases encouraged – local communities to establish charitable funds that would allow monies donated to be deducted as charitable contributions. They would then give additional tax credits up to 95% of ‘contributions’ in order to ease the additional tax burden created by the lower deductibility of the charitable contribution. These workarounds were developed primarily by high-tax states as a scheme to protect state tax payers with annual tax payments in excess of $10,000. The measure was seen largely as a vehicle that would allow high-tax blue states to maintain their high tax status without additional financial impact to their taxpaying constituents. The IRS regulation limits the tax credits to just 15% of the contribution, effectively eliminating the scheme as an viable vehicle to get around the SALT cap. New York and New Jersey, two of the high-tax states that adopted the workaround scheme along with others, are looking at legal options.