Gov. Phil Murphy plans to sign legislation on Friday to help New Jersey taxpayers get around President Donald Trump's law that guts your deductions on state and local taxes, NJ Advance Media has learned.

"When the disastrous federal tax legislation passed, Governor Murphy committed to pushing back and taking steps to ensure that the people of New Jersey are not subjected to unfair double taxation," Murphy spokesman Dan Bryan said Monday.

"Using a method employed by many states throughout the country, he worked with legislative leadership to protect our residents and prevent this plan from further hurting our taxpayers."

The measure, which cleared the state Legislature earlier this month, allows municipalities to set up charitable funds that taxpayers can contribute to instead of paying property taxes. They then would deduct those charitable contributions, which are uncapped, from their federal income taxes.

Murphy's action, however, could put him on a collision course with the president, who enacted a new $10,000 federal cap on how much you can deduct from state and local taxes. New Jersey has the nation's highest property taxes.

There are no assurances that the Internal Revenue Service will allow those deductions, and the Trump administration is opposed to the proposal.

"I think that I have seen that some legal attempts to relabel things," Kevin Hassett, chairman of Trump's Council of Economic Advisers, said at a breakfast for reporters last week sponsored by the Christian Science Monitor.

"I would guess that if there is some clever thing the lawyers came up with that made it so that the coach once again plays favorites that we wouldn't support it," Hassett said.

He said the New Jersey bill flies in the face of the administration's belief that the state and local tax deduction is an unfair subsidy for high-tax states.

In actuality, most of the states hardest hit by the deduction cap, including New Jersey, send billions of dollars more to Washington than they receive in services, according to the State University of New York's Rockefeller Institute of Government.

In New Jersey, 41 percent of households claim the state and local tax deduction, tied with Connecticut for second place behind Maryland, according to a report by the Pew Charitable Trusts.

The Republican tax bill caps the deduction at $10,000. As a result, more than 1 in 10 New Jersey households will see their taxes rise, more than any other state, according to the Tax Policy Center, a joint venture of the progressive Urban Institute and Brookings Institution.

In addition, while 61.5 percent of state households will see a tax decrease, that's a smaller percentage than 45 other states, according to the research group, whose advisory board includes experts who formerly served in Democratic or Republican administrations.

"If this administration wants to kill the charitable tax cut in New Jersey, they'll have to eliminate it in the 33 other states currently utilizing the provision," said Rep. Josh Gottheimer, D-5th Dist. "They can't just hose New Jersey taxpayers to the benefit of moocher states, as they have become accustomed to doing."

"My sense is that New Jersey is prepared to take the IRS to court to fight back," Gottheimer said.

The New Jersey legislation doesn't require the charitable funds, meaning taxpayers are at the mercy of their town, school district or county to opt in.

The property tax credits are currently set at 90 percent of the charitable contribution, but that can be adjusted by the head of the Division of Local Government Services.

Murphy, meanwhile, has been criticized for continuing a cap on the amount of local property taxes residents can deduct from their state income taxes, though the Democrat proposed increasing it to $15,000 from $10,000.

And New Jersey taxpayers whose property taxes are paid by their mortgage holder would be left out in the cold.

Several other states, including New York, Connecticut and California, have considerated legislation to provide credits against taxes that may no longer be deductible, according to the National Conference of State Legislatures.

Jonathan D. Salant may be reached at jsalant@njadvancemedia.com. Follow him on Twitter @JDSalant or on Facebook.

Samantha Marcus may be reached at smarcus@njadvancemedia.com . Follow her on Twitter @samanthamarcus.

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