Pritzker signs $55.9 billion budget

Illinois is tagged with more taxes when the governor had the opportunity to say no.

As governor of Illinois, J.B. Pritzker should be looking out for Illinois taxpayers and families from Rockford to Cairo by engaging in the checks-and-balances process.

Yet despite more than half of Illinois voters polled citing high taxes as a top-two issue facing the state, the governor signed a record-high budget that includes a digital ad tax, a fantasy contests tax, social media fees and much more.

Pritzker rarely sees a bill he doesn’t like passed by the Democratic supermajority in the Illinois General Assembly. He vetoes fewer than 1% of bills that make to on his desk.

The budget that passed at 4:13 a.m. on June 1 is no exception.

While Pritzker issued item and reduction vetoes to clean up drafting errors, the questionable digital ad tax, fantasy tax and more remain in place. Passing the budget without substantive vetoes has sealed Pritzker’s role as a rubber stamp for taxes in Illinois.

Here’s what the record-breaking budget includes:

$815 million to $1.4 billion in new revenue:

$300 million corporate tax hike from capping net-operating-loss deductions

The largest immediate tax hike in the budget is the extension of Illinois’ cap on deductions for net operating losses, which will raise corporate income taxes for companies recently losing money by $300 million in fiscal 2027, according to lawmakers. Illinois enacted the current cap beginning in the 2021 tax year to avoid large declines in corporate income tax revenue, as many companies began losing money during the pandemic.

Rather than phase out the provision as scheduled, starting in tax year 2027 companies’ carryover deduction will be limited to 15% of net income or $500,000, whichever is greater. That figure increases to 30% in 2028, 50% in 2029, 65% in 2030 and 80% in 2031.

Net-operating-loss deduction provisions are an important part of the state’s tax code that ensure businesses are treated fairly when it comes to taxation, regardless of changes in their profitability. Capping these provisions can lead to companies paying far higher effective tax rates than the state’s statutory corporate income tax rate. Because of this, every state tax code and the federal tax code contain provisions for net-operating-loss deductions.

Only two other states — Pennsylvania and New Hampshire — cap the amount of losses a business can claim. This burden would be atop Illinois’ corporate income tax rate, the second-highest in the nation.

$200 million in social media fees

The next-largest revenue increase comes from a new fee for social media companies with large user bases. Lawmakers passed a Pritzker-proposed new fee ranging from $0.10 to $0.50 per Illinois user per month, depending on the number of users each platform has. Lawmakers project the new fee will generate $200 million in additional revenue.

While the legislation attempts to ban companies from passing on this cost to consumers, Illinoisans will ultimately bear the burden of the new fees in the form of higher prices.

$60 million in digital asset taxes

Beginning Jan. 1, 2027, Illinois will begin taxing digital assets such as cryptocurrency. The new tax rate will be 0.2% of the value of the asset involved in the exchange, transfer, storing or custodial services for digital assets. The tax includes crypto exchanges, trades, wallet and custody providers holding customer assets, and firms transmitting digital assets between accounts. It would apply to any digital asset broker with a place of business in Illinois, including brokers with a physical presence and brokers with at least $100,000 annual digital asset business receipts.

In other words, major crypto exchanges will be required to collect the tax. Transactions are considered to have occurred in Illinois if the customer is physically located in Illinois or if online transactions, account information, mailing address, IP address or other data indicate Illinois is the customer’s place of primary use. Lawmakers expect the tax to generate $60 million.

$50 million to $60 million from decoupling from the federal Qualified Small Business Stock Exclusion

To promote investment and economic development for new small businesses, the federal tax code exempts capital gains from income taxes for stock acquired from eligible startups and small businesses. Illinois’ tax code automatically conforms to this federal provision. However, lawmakers are now decoupling Illinois’ tax code from the federal tax code in order to tax capital gains on stocks from qualifying small businesses. The change is expected to cost taxpayers more than $60 million, according to lawmakers.

$5 million from taxes on ‘fantasy contests’

Illinois will now impose a new 15% tax on online “fantasy contest” operators’ adjusted gross fantasy contest receipts, defined as total entry fees collected from Illinois participants minus cash prizes paid out — similar to taxes on gaming revenue, applied to the “hold,” or profit, instead of the total handle. The tax is expected to generate $5 million in fiscal 2027.

$200 million to more than $800 million from a ‘Targeted Advertising Services’ tax

Perhaps the most controversial tax lawmakers approved is a digital ad tax on “targeted advertising services” beginning Jan. 1, 2027. With the new tax, companies with more than $1 million in gross receipts from digital advertising services provided in Illinois will be charged 10% on the gross receipts of targeted advertising services provided in Illinois.

Opponents say the move violates the federal Internet Tax Freedom Act and the Uniformity Clause in Illinois, while being difficult or impossible to administer if upheld, and that the threshold for the tax is far too low and could affect many small businesses.

The state tax would pre-empt local digital ad taxes like the one Chicago Mayor Brandon Johnson has been pushing for the city to collect. Lawmakers say estimates of revenues from the tax range from $200 million to more than $800 million but that the budget doesn’t rely on this revenue, as they expect legal challenges.

$185 million in fund sweeps

In addition to hundreds of millions in guaranteed tax increases, the state budget also pulls several one-time gimmicks in order to “balance” the budget. Most notable is $150 million being swept from the Road Fund to the state’s General Revenue Fund. The revenue comes from higher-than-expected tax collections from Illinois’ state sales tax on gasoline. Because Illinois is one of only five states to apply the general sales tax rate to gasoline sales, as prices of gas have skyrocketed, so have tax collections.

While these revenues are supposed to be dedicated to the state’s Road Fund for transportation-related spending, this year’s budget will send $150 million in additional revenue from the Road Fund to the General Revenue Fund to finance higher general operations spending.

The state also will sweep $35 million from the State Coronavirus Urgent Remediation Emergency Fund to the General Revenue Fund. The coronavirus fund uses federal dollars related to pandemic aid and has to be expended by the end of 2026.

Pritzker is a rubber stamp for the Illinois Democratic supermajority

Nearly 400 bills passed in the 104th General Assembly. How many will Pritzker sign into law? Probably nearly all of them, if last year is any indication.

In 2025, Pritzker signed 433 of 436 bills that passed the General Assembly.

Since he took office in 2019, the governor has consistently neglected his duties of checking the legislature and balancing legislation, with a veto ratio of 0.83%

Pritzker is essentially a rubber stamp for Illinois’ Democratic supermajority, and that is a disservice to Illinois. In 2021, he signed some of the most gerrymandered maps in the nation with little objection. In 2025, Pritzker passed a $55.2 billion budget with a single line-item veto to correct a $161 million error in capital spending and signed a Chicago pension sweetener over objections from the city.

Now, instead of using his veto power to help make Illinois more affordable for residents, he has raised taxes and increased spending again.