Illinois’ record-high budget cost residents, businesses over $800 million in new taxes
The states’ $55.9 billion budget also raises lawmaker pay and temporarily suspends the state’s upcoming gas tax increase

Springfield, Ill. (June 1, 2026) — Today, Illinois lawmakers passed a record-high $55.9 billion spending plan for fiscal 2027, the largest budget in state history.

Analysis from the Illinois Policy Institute shows the budget includes over $800 million in tax hikes on corporations, social media and cryptocurrency, while much more could be coming. The budget also hiked lawmaker pay by 3% to $101,450 per year.

It now moves to Gov. J.B. Pritzker for approval.

Tax hikes in the 2027 budget: 

• Digital asset privilege tax: Creates a 0.2% tax on cryptocurrency transactions and services beginning Jan. 1, 2027, and is expected to generate $60 million annually.
• Fantasy tax: Imposes a 15% tax on fantasy contest operators’ Illinois revenue. Expected to collect an additional $5 million per year from fantasy contest operators.
• Social media platform fee: Charges large social media companies with more than 100,000 Illinois users a monthly fee of 10 to 50 cents per Illinois user, depending on platform size. Expected to generate $200 million each year.
• Targeted advertising tax: Creates a 10% tax on revenue from targeted digital advertising services in Illinois starting Jan. 1, 2027, and prevents local governments, including Chicago, from imposing their own digital ad taxes. Lawmakers say revenue estimates from the tax range from $200 million to more than $800 million, but expect legal challenges.
• Extends cap on net-operating-loss deductions. A business tax hike hitting companies that recently lost money; projected to generate $300 million in additional state revenue.
• Eliminates a tax break for small business investors. Illinois would stop following the federal Qualified Small Business Stock exclusion, making capital gains from certain startup and small business investments taxable at the state level; the move would generate an estimated $50 million to $60 million annually.
• Creates the Families Receiving Emergency Support for Hunger program: FRESH recipients who lose SNAP benefits because of upcoming federal work requirements changes will get a one-time $400 payment. This program is projected to cost the state $60 million to $70 million.

Lawmakers also suspended the scheduled July 1 gas tax increase for six months. While Illinois drivers face the second-highest gas taxes in the country, analysis found taxpayers won’t see major benefit from the halt in the 1.3-cent increase, because Illinois is one of only five states to charge a sales tax in addition to a gas tax. Despite a “lockbox” provision in the Illinois Constitution, lawmakers will divert an estimated $150 million in extra state sales tax revenue from gasoline to the state budget for the year. The Motor Fuel Tax increase will resume as normal Jan. 1, 2027.

“Once again Illinois lawmakers waited until the last minute to pass a ‘balanced’ budget that relies on new and higher taxes, fund sweeps and other one-time fiscal gimmicks,” said Bryce Hill, director of fiscal and economic analysis for the Illinois Policy Institute.“Lawmakers forced residents and businesses to pick up the tab for their reckless spending. Our state leaders should focus on finding ways to grow the population and attract new businesses into the state instead of adding to the burden of struggling Illinoisans. Until they break this cycle, Illinois will continue to lose domestic residents, taking their tax dollars and businesses into friendlier states.”

For bookings or interviews, contact media@illinoispolicy.org or (312) 607-4977.