Illinois lawmakers have approved the state budget for fiscal year 2027 after a late-night push that delivered new taxes, expanded public spending, and a series of affordability measures aimed at households across the state.
The sweeping package now heads to Democratic Governor JB Pritzker, who praised the state’s fiscal position, while Republicans warned it could strain Illinois’ long-term finances.
Passed by a 76-39 vote in the House on June 1, the plan that ran over more than 3,700 pages marks the largest budget in state history and blends expanded social investment with targeted tax increases on digital platforms, consumer goods, and emerging financial sectors.
A Record Budget
The budget totals $55.9 billion in spending, supported by a similar level of revenue, with lawmakers also approving an $830-million supplemental current-year package. That means the fiscal 2027 plan is broadly flat year-over-year, despite its headline size.
“Illinois now finds itself in the strongest position in decades,” Pritzker said following the budget’s passage.
It comes in slightly below the governor’s February proposal, but includes many of his proposed revenue and tax adjustments. Democrats were largely unified behind the budget, while no Republicans voted for it, and cautioned that the package could worsen Illinois’ financial outlook.
“A spending spree like this has to be put in check. We need systemic reforms if we’re going to attract investment in Illinois,” Senate Republican Leader John Curran said.
Winners
The clearest winners in the budget are households that stand to gain from a mix of direct financial support, expanded public services, and targeted cost-of-living relief. Much of the spending is directed toward easing pressure on everyday essentials—such as food, housing, education, and healthcare—through a combination of one-time payments, tax holidays, and longer-term funding increases.
Relief for SNAP Beneficiaries
Families who have been removed from SNAP benefits, owing to recent work requirement changes that are impacting beneficiaries nationwide, will receive one-time payments of $400.
There has been an 11 percent drop in SNAP participation in Illinois since the start of President Donald Trump’s second administration in January 2025. However, as benefits are delivered monthly and often for months at a time for families that rely on the program, it remains to be seen whether the $400 boost will make any meaningful, long term impact on the state’s neediest.
Tax Holiday for Parents
Parents and students also benefit from a temporary back-to-school sales tax holiday later this year, as well as increases in school and college funding, including hundreds of millions more for K-12 schools and a large boost to financial aid through the Monetary Award Program.
Housing and Motorists Affected
Housing is another clear beneficiary, with more than half a billion dollars directed toward affordable housing development and down-payment assistance, aimed at making homeownership and renting more accessible.
Motorists across the country have struggled with high gas prices due to the ongoing U.S.-Israel war in Iran, which has pushed up prices owing to the closure of the Strait of Hormuz, one of the world’s most important shipping routes.
To reflect the higher costs, motorists will benefit from a six-month pause in the scheduled fuel tax increase. That should save residents roughly 1.5 cents per gallon.
State lawmakers also stand to benefit from the budget. Base pay for lawmakers jumped from $98,304 to $101,405, a 3.2 percent increase, according to Illinois Policy. State law indexes their pay each year to the rate of inflation.
Losers
Not everyone is a winner, however. Several industries face new taxes and regulations thanks to the budget.
Budget Targets Digital Firms
Social media companies are the most heavily targeted with new tax increases, with a new per-user tax structure that scales with platform size and can reach $165,000 in base fees plus 50 cents per user per month for the largest firms, making it a significant recurring cost for major platforms operating in Illinois. Lawmakers project the new fee will generate some $200 million in revenue.
Prediction market operators also face new taxation, bringing sports betting-style platforms further into the state’s tax framework. The fantasy sports industry is also affected, not only through new licensing requirements, but also a 15 percent tax on operator revenue.
Digital asset businesses are similarly pulled into the tax base through new levies expected to generate part of the $65 million in combined revenue from that category.
Tax on Tires
Consumers face smaller but more visible cost increases through a 50-cent tax on each tire purchased, the proceeds of which is specifically earmarked for waste disposal funding. Remote tobacco retailers are also newly taxed under the plan, expanding the state’s reach into online and out-of-state sales channels.
Finally, a proposed tax on targeted advertising services is included in the legislation, but is not expected to generate revenue in FY27, as lawmakers anticipate it will face legal challenges.
“We are disappointed policies like the digital advertising tax and social media tax were included in the budget,” said Jack Lavin, president and CEO of Chicagoland Chamber of Commerce.
“We must focus on policies that are sustainable, economically constructive, and legally sound. Instead, these regressive and legally questionable taxes will make it harder and more expensive for businesses to operate at a time when employers are already navigating inflation, tariffs, supply chain challenges, and broader economic uncertainty.”
The Budget Details
- Social media platform tax: A new progressive tax based on user numbers in Illinois, expected to generate about $500 million.
- Digital asset and fantasy sports taxes: New levies on digital asset sales and fantasy sports operators projected to raise about $65 million, alongside a licensing system and a 15 percent tax on fantasy sports businesses.
- Consumer goods tax increase: A 50-cent tax hike on tire purchases.
- Prediction markets and tobacco taxation: Sports betting on prediction markets and remote tobacco retailers will face new taxes under the plan.
- Targeted advertising services tax: A proposed digital advertising tax is included, but not expected to generate revenue in FY27 due to anticipated legal challenges.
- Affordable fuel measure: A six-month pause on the annual July 1 Motor Fuel Tax increase.
- Back-to-school sales tax holiday: A temporary state sales tax exemption on school supplies, clothing, computers, and related items from August 7-16, 2026.
- Food assistance funding: Nearly $100 million in support for food affordability programs, including emergency payments and school meal expansions.
- Housing investment: Major funding for “missing middle” and affordable housing development programs through the Illinois Housing Development Authority and the Illinois Department of Commerce and Economic Opportunity.
- Education funding expansion: A $350 million increase in K-12 Evidence-Based Funding and $721.6 million for the Monetary Award Program to support college affordability.
- Healthcare and debt relief: A $5-million deposit into the Medical Debt Relief Pilot Program Fund, building on prior investments that have erased more than $1 billion in medical debt statewide.
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