Source: IRS Notice 2018-54

Under the Tax Cuts and Jobs Act, the deduction for state and local taxes (SALT) on itemized 2018 individual tax returns will be limited to $10,000.  Some states are working on legislation designed to create new state tax credits in lieu of paying state income taxes directly.  Under this Notice, the IRS has announced that it intends to propose regulations reclassifying such payments as payments of SALT and including them within the $10,000 annual limitation thereby shutting down attempts to do an end-run around the new limit.