Legislation sponsored by State Senator Win Stoller (R-Germantown Hills), which could potentially help thousands of business owners, passed out of the General Assembly over the weekend.
Senate Bill 2531 utilizes an IRS-approved method that would allow pass-through businesses, such as S-corporations and partnerships, to bypass the $10,000 cap on the State and Local Tax (SALT) deduction that was created by the federal Tax Cuts and Jobs Act in 2017. Presently, owners of pass-through entities report their share of business income on their individual income tax return, making them subject to the $10,000 deduction cap on state and local taxes.
“Over the past year, Illinois businesses have suffered from the negative economic effects of the COVID-19 pandemic,” said Sen. Stoller. “This legislation is a common-sense approach to help alleviate some of the financial burden that thousands of Illinois businesses currently face.”
Sen. Stoller’s S.AL.T. bill allows a small business to elect to be taxed at the entity level, instead of letting the income pass through to their personal return. The owner would then claim an offsetting credit on their state return.
“With just a simple change to our state’s tax code, my legislation allows up to 400,000 Illinois small business owners to save thousands of dollars they desperately need on their federal taxes,” said Sen. Stoller. “I’m proud to have sponsored bipartisan legislation that provides a small measure of relief to our state’s job creators as they work toward recovery.”
Senate Bill 2531 passed both the Illinois Senate and House unanimously, and now heads to the governor’s desk.