Last-Minute Illinois Budget Increases Spending with Over $800 Million in New Taxes

Just minutes before the deadline, Illinois Democrats passed a record high budget totaling $55.2 billion. The budget features a $2 billion increase in spending, containing more than $800 million in tax hikes on corporations, sports betting, and tobacco. 

Illinois Democrats, led by Governor J.B. Pritzker, touted their passage of a ‘balanced budget,’ but the reality is that the spending increases were made possible only through tax hikes. 

The projected total tax revenue will increase by $394 million, notably through corporate tax hikes of around $72 million. This increase in the corporate tax rate will hinder further economic growth and contribute to the further emigration problem in Illinois. Over 420,000 people have left the state since 2020, and despite 54% of Illinoisans citing high taxes as the biggest problem they face, Democratic leadership has shown no intention of serving their constituents.  

By removing key exemptions and grants, Illinois lawmakers are relying on short-term revenue at the expense of long-term economic stability. Eliminating these programs, without lowering overall tax rates, amounts to nothing more than a hidden tax hike on residents and businesses. The repeal of hotel tax exemptions on short-term rental platforms amounts to a $15 million tax hike that will stifle a growing industry vital to Illinois’ travel and tourism economy. Meanwhile, scrapping the Property Tax Relief Grant will trigger a projected $43 million increase in property taxes, hitting families and small businesses hardest. Stripping away incentives for homeownership and investment makes it harder for people to build roots in communities across the state — especially as Illinois continues to suffer from significant population loss in recent years. 

One troubling provision in the bill expands the state’s taxing authority to include all businesses that transact in Illinois, not just those with a physical presence. This tax change effects companies that operate in other U.S. states and do business in Illinois, including companies that store assets overseas. These tax increases will diminish the purchasing power of Illinoisans who want to start businesses and own property, while corporations doing business in Illinois will incur higher costs and raise prices to offset revenue losses in the long run.  

Part of this increase in spending came from a request from Illinois Attorney General Kwame Raoul to increase funding to engage in partisan legal battles with the Trump administration. Backed by Illinois Democrats that have complained about Trump-backed federal spending cuts and blamed him for their ‘necessary’ spending increases, the Office of the Illinois Attorney General will receive $116 million from the state’s general fund.  

Drastic increases in state spending are not new to Governor Pritzker. Since entering office in 2019, state spending has increased by $16 billion, and, through 50 separate tax hikes, the effective state tax burden has totaled $80.1 billion during his tenure. Illinois Democrats have proven they have no regard for fiscal responsibility, and the 2026 budget is further evidence of the reckless and irresponsible attitude that Illinois Democrats have towards spending. Without real policy solutions to permanently shrink the budget without destroying the economic potential for Illinoisans, the state will continue to reduce their own competitiveness, decrease growth, and bail themselves out with further tax increases.