Illinois SALT workaround
Ms. Savage,
Please clarify you comment that Illinois Real Estate Taxes can be included in the SALT workaround. The Crain’s Chicago Business article that you cited, “This new law means a windfall for Illinois taxpayers”, states the bill specifically targets the $10,000 annual cap on deductions for state and local taxes. My understanding is the partnership or S-Corp can pay the 4.95% IL personal income tax of a partner or shareholder on partnership or S Corporation profit at the entity level, and the entity receives a deduction that reduces federal taxable income. The 4.95% is added back on the Illinois income tax return for no net effect to the State of Illinois. I searched the bill and could not find any mention of the entity paying an individual’s real estate tax to reduce an entities federal tax liability.
Thank You.
Terry Says
If a partnership pays your property tax then your partnership income is reduced by that amount, thus reducing the Federal income taxes you pay. THAT’s the advantage for the individual. And that’s the “SALT workaround” being enacted in many states. Sadly, that doesn’t work for people who just get wages and don’t have LLCs. They are still operating under the $10,000 cap.
