A provision in Illinois law allowing pass-through businesses to deduct state taxes from their federal tax returns will expire at the end of 2025. The Pass-Through Entity Tax (PTET) provision, often called the SALT (State and Local Taxes) workaround, was enacted in 2021 as a response to changes in federal tax law.
The Illinois General Assembly included a sunset clause when passing the measure, meaning it is set to automatically end after 2025. Without an extension, businesses in Illinois that file as pass-through entities could face higher federal tax bills beginning in 2026.
According to the Taxpayers’ Federation of Illinois, the SALT workaround saves Illinois businesses about $500 million annually.
