The Internal Revenue Service (IRS) has issued a proposed new rule that will serve to block state efforts to circumvent the $10,000 state and local tax (SALT) deductions limit that was established by the Tax Cuts and Jobs Act last December. A number of high-tax states – New York, New Jersey and Connecticut, in particular – have formally adopted proposals changing tax regulations and classifications in order to allow taxpayers to avoid the SALT cap. For example, the three states have re-characterized their state and local tax payments as charitable donations in order to try to maintain federal deductibility. However, the new IRS regulation provides that taxpayers can receive a federal tax write-off only equal to the difference between any state tax credit and their charitable donation. New York Governor Andrew Cuomo (who recently opined that America “was never that great”) has threatened to bring a lawsuit if the federal SALT cap is enforced. Other high-tax states, California and Illinois, are considering similar proposals.