A measure up That Could Save Small Businesses in Illinois Money on Taxes is on the books now.
The law will allow S companies and partnerships to avoid the $ 10,000 cap on state and local tax withholding known as the SALT withholding.
The sponsor of the invoice, Senator Win Stoller, R-Germantown Hills, said the legislation has the potential to help up to 400,000 business owners in Illinois save thousands of dollars on federal tax returns annually.
“The nice thing about this bill is that it doesn’t cost Illinois anything,” said Stoller. “All tax savings are federal, but we had to make a simple amendment to Illinois tax law so our small businesses could take advantage of this opportunity.”
The IRS issued a notice in 2020 essentially blessing this type of workaround in the Tax Code.
More than a dozen states have passed laws to approve the workaround, including Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Georgia, Idaho, Louisiana, Maryland, Minnesota, New Jersey, New York, Oklahoma, Rhode Island, South Carolina, and Wisconsin, according to the American Institute of CPAs.
In April, Governor JB Pritzker, along with six other Democratic governors, sent a letter to President Joe Biden asking him to lift the cap on state and local tax deductions under the Tax Cuts and Jobs Act 2017.
According to the Illinois Policy, the change will benefit Pritzker. Based on his 2019 income tax filings, the governor will save an estimated $ 2.5 million in federal income taxes annually.
“It is very gratifying to be able to fall back on my background, my expertise as an auditor and even as a small business owner, and to uncover this opportunity that might have been overlooked without someone with a financial background,” said Stoller.