EAST RUTHERFORD — Gov. Phil Murphy signed into law a bill to soften the effect of the federal tax overhaul's cap on state and local tax deductions.

Murphy signed the bill Friday in East Rutherford, alongside state and local officials, U.S. Sen. Bob Menendez and Rep. Bill Pascrell.

The 2017 federal tax law caps state and local tax deductions at $10,000. It led officials in high-tax states like New Jersey scrambling to blunt the potential impact.

A similar measure has been enacted in New York. California is weighing a similar proposal.

Under the legislation, towns and school districts collecting property taxes may set up charitable funds.

Taxpayers would then pay property taxes to the funds and get a deductible tax credit in return. The new law does not cap charitable deductions.

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