As announced in IRS News Release 2018–172, the U.S. Department of the Treasury and the IRS have issued proposed regulations providing rules on the availability of charitable contribution deductions when the taxpayer receives or expects to receive a corresponding state and local tax credit.
The proposed regulations are designed to clarify the relationship between the state and local tax credits and the federal tax rules for charitable contribution deductions.
Under the proposed regulations, a taxpayer who makes payments or transfers property to an entity eligible to receive tax deductible contributions must reduce their charitable deduction by the amount of any state or local tax credit the taxpayer receives or expects to receive.
The proposed regulations are intended to be effective for contributions made after Aug. 27, 2018.Examples, details and information on submitting comments can be found in the IRS’s press release.