Illinois’ increased revenue because of federal economy, not state lawmakers
Higher tax revenue paints a better picture for Illinois’ budget, but increases have been driven by strong national economy, rather than local policy.
Despite criticism of the federal government, Illinois has benefitted from the national economy.
In 2025, the Governor’s Office of Budget Management revised Illinois fiscal year 2026 revenue estimates upwards to $54.85 billion, $1.44 billion higher than prior estimates. Illinois leaders now expect these collections to further increase in FY2027, with roughly $1 billion in additional income and sales tax collection.
Stronger than expected revenues during the first half of the year have increased the likelihood Illinois may be able to meet budget targets.
National trends drove Illinois’ growth
Most revenue growth has come from sales and income tax collections, categories closely tied to national wage growth. Between 2024 and 2025, revenue estimates for those two categories grew by nearly $900 million.
Illinois has already collected over $1 billion more through the first seven months of FY2026 compared to the same period last year, while also seeing notable gains in gambling revenue.
At the same time, personal income in Illinois grew 4.65% during the past year, roughly in line with the national average. The growth, driven by broader national economic conditions, boosted taxable income and consumer spending, giving Illinois more revenue to collect.
This recent uptick also contrasts with Illinois’ long-term performance, with the state’s personal income growth generally trailing the national average in recent years.
Illinois is benefiting from strong national economic conditions rather than a sustained improvement in its underlying growth trajectory.
Shifting blame
Despite this revenue growth, Gov. J.B. Pritzker has warned of fiscal threats from federal policies and has asked agencies to find “savings” of up to 4% of the FY2026 general funds budget, citing federal economic uncertainties as a threat to core services.
“Illinois has built a strong economy and proven its fiscal responsibility, but Trump’s disastrous policies threaten to undo that progress,” Pritzker stated in an executive order.
Illinois’ long-term economic performance tells a different story.
Illinois has had among the slowest growing economies in the nation in recent years. Total personal income has lagged much of the country, even as per-capita income remains above national averages.
Slower growth reflects population loss. Illinois has been one of only seven states that have lost population since 2019. While international migration trends partially offset those losses in recent years, domestic migration is negative.
Much of this comes from state policies, especially surrounding high taxes. In 2024, 95% of those leaving fled to states with lower tax burdens.
Conclusion
Illinois’ recent revenue gains reflect favorable national economic conditions, not structural improvements in state policy. The state’s budget has seen massive rises despite sluggish long-term growth, supported by temporary federal aid and increased taxes. Illinois should be cautious about projecting continued revenue strength into FY2027 given Illinois’ long-term pattern of lagging economic growth.
Blaming fiscal woes on federal policy overlooks the structural issues within Illinois’ own budgeting and tax system. Sustainable fiscal health will require strategic reform. Illinois Forward 2027 offers a blueprint for Illinois to achieve this, including:
- Enacting spending caps
- Truly rightsizing over bloated agency costs
- Eliminating pork projects
- Making real reforms that strengthen growth without relying on burdensome tax hikes.