What to watch: Tax hikes probable as Illinois nears May 31 budget deadline
Illinois Policy Institute experts available to discuss looming tax hikes, budget gimmicks and revenue shortfalls

CHICAGO (May 28, 2026) — Illinois lawmakers are approaching the May 31 deadline to pass a fiscal year 2027 budget, and they face a revenue shortfall state analysts estimate is $720 million to $900 million.

Analysis by the Illinois Policy Institute found that Illinoisans should watch for a menu of major tax hikes and budget maneuvers in the coming days.

For the first time in recent history, Illinois lawmakers released a budget bill a few weeks before the deadline. Experts at the institute identified a disconnect between how much the proposed budget spends and how much revenue the state is expected to generate. That equates to about $700 million in tax hikes lawmakers have not yet identified.

In total, spending in Illinois’ General Revenue Fund is roughly 40% higher than Gov. J.B. Pritzker’s first budget in fiscal year 2020.

Illinois Policy Institute experts are available to discuss Pritzker’s proposed budget and tax hikes ahead of the budget deadline.   

Possible tax hikes in Pritzker’s budget: 

• Corporate tax hikes: One of the largest possible revenue increases would extend Illinois’ cap on net-operating-loss deductions, resulting in an estimated $269 million corporate tax hike. The move would increase taxes on businesses in a struggling economy and add to Illinois’ 3rd-highest corporate tax rate.
• New social media fees: The governor has proposed a new fee on large social media companies expected to raise roughly $200 million in additional revenue. Fees would range from $0.10 to $0.50 per Illinois user each month. The legality of this tax hike is questionable and Maryland’s similar law has been tied up in litigation since 2021. Illinois’ law could face similar challenges, resulting in costly refunds.
• Casino tax increases: Lawmakers are considering higher casino taxes expected to generate another $120 million. The proposal would raise tax rates on table games at Illinois casinos outside Chicago to as much as 50% per
• Fund sweeps and pressure on property taxes: Another proposal would transfer $139 million from other state funds into general revenue, including reducing the share of state income tax revenue distributed to local governments. Analysts warn the move could place additional pressure on local governments to raise property taxes.
• Additional tax hikes: Lawmakers are considering proposals that could emerge during final negotiations, including a digital advertising tax, higher corporate income tax rates and reductions to tax credits and deductions.

“With only a few days left to pass the state budget, lawmakers appear poised to raise taxes on Illinoisans because current revenues will fall far short of their proposed spending,” said Bryce Hill, director of fiscal and economic analysis for the Illinois Policy Institute.“Illinois lawmakers are once again attempting to ‘balance’ the budget with optimistic revenue projections, tax hikes and one-time gimmicks.  Many of the proposals under discussion would increase costs on businesses, consumers and local governments while doing little to solve Illinois’ long-term fiscal challenges. As high taxes remain a top issue for Illinoisans, lawmakers should stop before adding unnecessary tax increases on residents and businesses.”

To learn more about Illinois’ budget, visit illin.is/tax-threat.

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