Illinois Unveils $55.2B Budget with New Taxes, Economic Shifts, and 300+ Legislative Changes

Illinois enters late July with a flurry of significant developments across government, business, education, and the community. This week, Governor J.B. Pritzker’s signing of the state’s record $55.2 billion budget ushers in a slew of new tax and policy changes. According to Illinois Policy, state revenues for 2025 exceeded budget forecasts by $717 million, driven by personal income tax surpluses. Yet, despite this windfall, the new budget includes $482 million in additional taxes. Lawmakers defend the move as a way to bolster essential services, with the new levies targeting areas ranging from remote retail sales to sports wagering, telecommunications, tobacco, and short-term rentals. The stated purpose is to fund education, pensions, and healthcare, and to manage persistent fiscal challenges. High taxes, meanwhile, remain the top voter concern and are blamed for sluggish job and population growth, with Illinois having lost over 420,000 residents since 2020, noted Illinois Policy and the General Assembly’s Commission on Government Forecasting and Accountability.

In government and local politics, more than 300 new laws take effect this year, reports Disparti Law. Highlights include an outright ban on corporal punishment in all schools, expanded mental health counseling coverage for first responders, and new protections for coal miners and nursing home residents. The state also updates its law on student-athlete compensation, clarifying name, image, and likeness (NIL) rights, and enacts reforms to improve traffic safety near O’Hare.

On the business and economic front, the new Advancing Innovative Manufacturing (AIM) tax credit program makes Illinois more attractive for high-tech manufacturers, according to Ankura. This initiative, part of a broader economic development push in the FY 2026 budget, offers meaningful tax incentives for companies investing in new or expanded manufacturing facilities, aiming to generate jobs and keep Illinois competitive. Nonetheless, Illinois continues to contend with headquarters losses, as major companies such as Caterpillar and Citadel relocate operations, compounding broader concerns about economic vitality.

Education and community news are shaped by both challenge and opportunity. As schools across the state adjust to funding uncertainties, portable classrooms are being added to address overcrowding, and nearly $200 million in school improvement projects are underway, The Daily Herald reports. Legal fights over federal education funds continue, with Illinois joining other states in suing the Trump administration for freezing funding. At the local level, Illinois State University recently approved an $82 million renovation and construction plan for its visual and performing arts buildings, thanks to full state funding. Trustees also enacted measures to facilitate Illinois Department of Transportation road upgrades impacting campus infrastructure.

While no major weather disruptions hit the state in the past week, routine summer heat and scattered rain have prompted local authorities to remind listeners to stay hydrated and cautious.

Looking ahead, listeners should keep an eye on September’s federal appeals court hearing on Illinois’s gun and magazine ban, as well as developments in the ongoing debate over the state’s sanctuary policy, following a recent court decision upholding Illinois’s stance against federal intervention. School enhancements, economic innovation, and fresh legislative reforms all promise to shape Illinois’s future.

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