EDITOR'S NOTE: This story has been corrected to clarify what the new regulations do.

Gov. Phil Murphy's administration is moving forward with a law to help New Jerseyans save at least part of a popular property tax break, even after the IRS largely rejected the effort.

The state government has adopted regulations allowing New Jersey's municipalities, counties, and school districts to accept some tax bills as charitable donations to help residents get around a $10,000 limit on state and local tax deductions under President Donald Trump's recent federal tax overhaul, the state Department of Community Affairs announced Tuesday.

"In light of Washington's recent efforts to punish net-donor states like New Jersey through the federal income tax code, our administration is making it easier for New Jersey's hard-working taxpayers and property owners to re-invest their tax dollars in their own communities," Murphy said.

"By adopting these new regulations, we are permitting our local governments to establish charitable funds that will help them spend local money where it is most needed, funding vital public services and investing in public infrastructure here in New Jersey," the governor added.

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Murphy, a Democrat, signed a law in May allowing the funds to fight back against the federal tax overhaul, which Republican-led Congress passed and Trump, a Republican, approved in December.

The law allows local government to create charitable funds that residents can pay into instead of paying their taxes. In exchange for their donations, New Jersey homeowners can receive a 90 percent tax credit they could use against their local real estate tax bill.

Local governments can use money donated to the funds to pay for public safety, capital improvements, social services, open space, recreation, libraries, and more.

But last month, the Internal Revenue Service under Trump proposed a rule that could invalidate efforts by Democrat-leaning states to establish such funds to circumvent the deduction cap.

The IRS rules do allow a 15 percent credit for donations. Thus, Murphy's administration say the new state regulations give residents a choice: take the 15 percent allowed by the IRS or take the full 90 percent allowed by the state if they're willing to risk defying the IRS.

"These regulations ensure transparency and fiscal accountability, safeguarding donated funds and assuring sufficient financial support for public purposes," Melanie Walter, the acting director of the New Jersey Division of Local Government Services, said in a statement.

It's unclear how the IRS would handle those who seek the 90 percent credit when they file their income tax returns -- or whether any local government in New Jersey will create the charitable funds in the first place.

None has done so yet. Local government lobbyists have said they were waiting for Murphy's administration to issue guidance on how to implement the funds.

The state even warns residents in the new regulations.

"The Division of Local Government Services makes no representations with respect to how the IRS will treat property tax creditable-contributions to a charitable fund," the state's notice reads.

A spokeswoman for the IRS referred to the agency's website, which includes information about the regulation related charitable funds. But she declined further comment.

The state and local tax deductions capped under Trump's overhaul are popular in high-tax states like New Jersey, which has the highest property taxes in the nation.

More than four in 10 taxpayers in the Garden State claimed the break and deducted an average deduction of $17,850 in 2015, according to the Pew Charitable Trusts.

Only residents of New York, Connecticut, and California deduct more from federal taxes than New Jerseyans, according the progressive Institute on Taxation and Economic Policy.

Most of the states hit hardest send billions of dollars more to Washington than they get back in services.

New Jersey taxpayers sent $31 billion more to D.C. in 2015 than they received in services -- more than any other state except New York, according to the State University of New York's Rockefeller Institute of Government.

Murphy has accused Trump's administration of capping the deductions to help pay for the tax overhaul, rewarding red states and punishing blue states.

Murphy's administration also filed a lawsuit with three other states against Trump's administration, alleging the tax overhaul infringes on the states' "sovereign authority to determine their own taxation and fiscal policies."

NJ Advance Media staff writers Samantha Marcus and Jonathan D. Salant contributed to this report.

Brent Johnson may be reached at bjohnson@njadvancemedia.com. Follow him on Twitter @johnsb01. Find NJ.com Politics on Facebook.