The Illinois General Assembly passed legislation extending Illinois’ SALT (State and Local Taxes) Workaround during its fall Veto Session.

The workaround permits Illinois pass-through businesses (S-CORPS and partnerships) to deduct state taxes from their federal tax returns.

“Small businesses were relieved when the General Assembly voted to extend the SALT workaround,” said NFIB Illinois State Director Noah Finley. “Pass-through businesses—such as S-Corps and partnerships—could have been hit with a higher tax burden next year if Illinois legislators hadn’t voted to make the workaround permanent.”

The provision, more formally known as the Pass-Through Entity Tax (PTET) provision, was set to expire at the end of 2025. If the General Assembly hadn’t extended it, many Illinois businesses that file their taxes as pass-through entities would have seen their federal tax liabilities rise in 2026.

The Taxpayers’ Federation of Illinois estimates the SALT workaround saves Illinois businesses approximately $500 million a year.

The legislation was championed in the Illinois House by Rep. Curtis Tarver (District 25).

It now goes to the governor for his signature.