Illinois small business owners could save thousands on taxes
Small business owners in Illinois could soon be getting some relief on their taxes, something one is calling a “step in the right direction” for the state’s business environment.
In May the General Assembly passed legislation sponsored by Sen. Win Stoller, R-Germantown Hills, that would allow small business owners to opt-in to a 2017 federal tax cut, potentially saving them money.
Through the measure, Senate Bill 2531, small businesses would be able to work around a $10,000 cap that is placed on their state and local income tax deductions. Small business owners currently have to report their share of business income on their individual income taxes, making them subject to the cap, something large corporations do not have to do.
If this legislation, which passed unanimously in the House and Senate, is signed by Gov. JB Pritzker, then small business owners would not be subject to the cap — something they are calling a win for small-business owners in Illinois.
“I think it’s a step in the right direction,” said Michael Rieker, owner of Peoria Tire. “(It’s) progress in a way we haven’t seen in recent years and progress that doesn’t cost anything. That’s kind of the neat thing … is it’s not taking money out of the state coffers at the expense of something else.”
Being that the legislation only deals with a federal tax cut, Rieker is correct, this deal will not cost the state of Illinois any money. Stoller says he saw other states like New York and New Jersey pass similar legislation at no cost to their own states, and figured Illinois could benefit in the same way.
“This is kind of my wheelhouse and my space, so I recognize this could be a huge opportunity for small businesses in Illinois,” said Stoller, who runs a small business himself. “The kicker is it would cost Illinois nothing because the tax savings is all on the federal side.”
Business owners are saying the potential savings from this legislation, which Stoller estimates could be between $5,000 and $50,000 for any given business, will help them continue to grow their companies and compete with large corporations.
“All we’re going to do is take that money and be able to invest it back into our business,” said Paola Hinton, owner of Five Senses Spa, Salon and Barbershop in Peoria. “Which is what any entrepreneur does, that’s why they’re entrepreneurs, to build and to grow.”
“First and foremost, it allows us to reinvest into the company,” Rieker said. “And investment defined as new equipment, safer equipment it means being able to provide cost of living adjustments for our employees. It allows us to continue to provide retirement and health care benefits.”
While this proposal is being viewed as a win for the state by small business owners, they still do not think Illinois is doing enough, yet, to be a friendly environment for small businesses.
“When you’ve got people helping small businesses to be able to survive and rebuild, of course (it’s a good sign),” Hinton said. “Of course it’s great, but I think Illinois has a lot, a lot more work to do. Illinois has a major problem and we’re going to need a lot more legislation to fix it.”
Hinton said rising costs and taxes, on top of changing government regulation, stretch already busy business owners too thin.
“You talk to a business owner who is busy and maybe has a home and children as well, and now you say ‘ok now you have to go and campaign for yourself’ and try to have these legislators understand what the impact is,” Hinton said. “You’re running a million miles an hour; you might not have the time or the business acumen to go about that stuff.”