An election that lets an Illinois partnership or S corporation pay state income tax at the entity level at 4.95 percent, deductible on the federal return, with owners receiving a credit on their Illinois returns.
It was built to work around the $10,000 SALT cap. With the cap at $40,000 the math changed: owners who now fall under the cap may gain less, while high earners above the phase-down still benefit. It is an annual election that needs modeling.
Sometimes. Owners whose state taxes now fit under the $40,000 cap gain little; owners above the $500,000 phase-down still benefit. We model it each year.
Source: 35 ILCS 5/201(p); Illinois P.A. 102-0658; IRS Notice 2020-75
Last reviewed September 17, 2026. Tax rules change; confirm current law before acting.
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