PEORIA, Ill. (WMBD) — Small business owners in Illinois should see a reduced tax bill thanks to a new law.
The new S.A.L.T. Deduction Law allows S-corporations and partnerships to avoid the $10,000 cap on state and local tax (SALT) deductions on federal taxes.
“Most small businesses pay their business taxes on their personal tax return. My S.A.L.T. bill shifts that business income away from that personal return, so that they pay taxes as a business,” explained State Sen. Win Stoller (R-Germantown Hills), who sponsored the bill.
Stoller said his legislation will level the playing field with larger corporations and comes at no cost to taxpayers.
“It frees up all of that business income to be deductible on their federal tax return, which generates substantial tax savings for these small business employers,” he said.
Jerry Weaver, owner of Jubilee Cafe in Kickapoo, said the tax savings will help the bottom line.
“Anytime the state of Illinois or the federal government can relieve us from some of the taxes we pay is very encouraging,” he said.
Weaver said small businesses often pay taxes that large corporations don’t’ have to.
“Large corporations are fortunate because they are able to generate more money on things, and not have to pay taxes on some of the things we have to pay taxes on,” he said.
Stoller instructed business owners to tell their tax preparer to elect the pass-through entity (PTE) tax and associated credit. He said more than 400,000 Illinois businesses will benefit from the new law.
“It’s a unique opportunity at no cost to the state of Illinois, we can save money on our federal taxes,” he said.
Tax season starts on Jan. 24.