SB2531 Summary

• Establishes a pass-through entity tax for taxable years ending December 31, 2021 through December 31, 2025, allowing partnerships and S-corporations to elect an entity-level tax of 4.95% on net income.

• Partners and shareholders of electing entities receive a credit against their individual income tax liability equal to 4.95% of their distributive share of the entity's net income.

• Nonresident individuals who are partners or shareholders are not required to file Illinois income tax returns if their only income source is from an electing entity and the credit equals or exceeds their tax liability.

• Provides special rules for tiered partnerships to avoid double taxation and allows foreign tax credits for taxes paid to other states on similar pass-through entity income.

• Allocates 6.06% of revenue from the pass-through entity tax to the Local Government Distributive Fund beginning February 1, 2022.