The Treasury and IRS have issued new rules that will block blue states' attempts to circumvent the new $10,000 cap on state and local tax deductions.
The proposed regulation was released Thursday afternoon.
The $10,000 limit on the so-called SALT deduction was part of the Tax Cuts and Jobs Act, an overhaul of the tax code, which was passed last year.
New York, New Jersey and Connecticut — among the states with the highest property taxes — had put legislation in place to help taxpayers bypass the limit on the deduction.
Those plans included permitting municipalities to set up charitable funds and allow taxpayers to contribute to them.
"Congress limited the deduction for state and local taxes that predominantly benefited high-income earners to help pay for major tax cuts for American families," said Treasury Secretary Steven T. Mnuchin, in a statement.