New Illinois Laws Take Effect July 1, Starting July 1, 2025, Illinois will usher in several new laws ranging from education requirements to a ban on small single-use plastic bottles in hotels. The State will also implement several new tax increases as part of the record $55.2 billion Fiscal Year 2026 State Budget, passed by Democrats this spring.
New Taxes Taking Effect:
Sports Betting Tax Increase
A per-wager tax of $0.25 for the first 20 million bets, doubling to $0.50 after that. DraftKings and FanDuel have already responded by raising costs for users.
Hotel Tax on Short-Term Rentals
Services like Airbnb and Vrbo are now subject to Illinois’ Hotel Operators’ Occupation Tax, meaning families trying to travel in-state will pay more out-of-pocket.
Telecommunications Tax Hike
An additional State tax went into effect on Illinois telecommunications customers. The increase from 7.00% to 8.65% will generate money to enlarge and stabilize funding for the new 9-8-8 suicide prevention hotline.
Tobacco Tax Hike
The wholesale tax on tobacco and nicotine products jumps from 36% to 45%, another hit to consumers.
Noteworthy New Laws:
Ban on Small Single-Use Plastics in Hotels
Signed into law last year, the Small Single-Use Plastic Act prohibits hotels from stocking hotel rooms with small, single-use plastic bottles containing personal care products like soap and shampoo. Guests must request the products now.
The law applies to hotels with 50 or more rooms but will expand to those with fewer than 50 rooms beginning January 1, 2026. Hotels found in violation will receive a written warning for a first offense and face fines of up to $1,500 for second and subsequent offenses.
Employment Data Reporting
Under Public Act 103-0304, when collecting and reporting data on employment records, state agencies must include specified data on persons who identify as non-binary or gender non-conforming.
Birth Certificate Access and Recognition
Two new laws expand access and recognition in vital records:
- Public Act 103-0682 waives fees for birth certificate requests made by the Office of the State Guardian.
- Public Act 103-0948, known as Liam’s Law, allows parents to request a certificate of birth for a stillbirth occurring at or after 20 weeks.
Beginning with the 2026–2027 school year, public schools must teach students about the environmental and ecological effects of climate change. Beginning July 1, the State Board of Education is tasked with developing instructional resources and professional development for educators, pending funding from lawmakers.
Insulin Cost Cap
The Access to Affordable Insulin Act lowers the out-of-pocket cap for insulin from $100 to $35. The law also enables participants to purchase insulin at post-rebate prices through a discount program.
Assisted Living Access
The Assisted Living and Shared Housing Act has been amended to expand eligibility for assisted living facilities to individuals requiring non-routine catheter care.
Opioid Overdose Prevention
Public Act 103-0845 requires state agencies to ensure opioid antagonists like Narcan are available and train staff in their use. The law also shields trained employees from civil liability under the Good Samaritan Act.
Language Access in Courts
Under Public Act 103-1056, foreign language interpreters for witnesses, self-represented litigants, and low-income individuals must be provided at no cost. Judges must now proactively ask if interpretive assistance is needed, with services available in at least 13 languages.
Sexual Exploitation and Prostitution
This new law changes several statutes related to sexual exploitation and prostitution. Most notably, it requires law enforcement to automatically seal records relating to a person's Class 4 felony conviction for prostitution if that conviction is eligible for expungement. It requires law enforcement agencies to establish a new policy for officer conduct in a criminal investigation related to prostitution. It also changes several terms in the law: "juvenile prostitution" to "commercial sexual exploitation of a child", "prostitute" to "person engaged in the sex trade", and "juvenile prostitute" to "sexually exploited child".
BUDGET
CGFA report on State cash flows for Fiscal Year 2025. The June revenue report from the Commission on Government Forecasting and Accountability (CGFA) was the final summary of State cash flows for fiscal year 2025, which ended June 30, 2025. The State of Illinois took in higher revenue in FY25, which was needed to pay for billions of dollars in new spending implemented by the Democratic majority. Exclusive of transfers in, which are payments to the State from outside sources such as the federal government and the Illinois State Lottery, Illinois took in almost $55.1 billion in general funds receipts in FY25. This included $5.6 billion in June 2025 general funds revenues to close out FY25.
It should be noted, however, that the June 2025 State general revenue total and year-end general revenues overall totals were both dependent on significant State personal income tax payments to the Illinois Department of Revenue (IDOR). Personal income tax payments to IDOR in June 2025 were $3.077 billion, up $445 million from one year earlier in June 2024, and personal income tax payments to IDOR for FY25 as a whole were $33.154 billion, up $3.02 billion from FY24.
CGFA’s June 2025 and yearend FY25 report reveals that these net increases in IDOR/Illinois personal income tax revenues were the only line item that kept the State’s budget afloat in FY25. All other major State-controlled general revenue sources put together – this list includes corporate income tax payments, sale tax payments, public utility tax payments, estate tax payments, and excise taxes paid by suppliers and distributors of tobacco and alcohol – collectively generated stagnant or declining revenue streams in FY25. The State tax system has become a one-industry environment that is dependent on a single revenue stream.
Trends in State corporate income tax receipts and personal income tax receipts have been affected by changes in federal and worldwide income tax structures. These changes have led many tax advisors to move a growing share of private-sector taxable income from an institutional setting and environment to a pass-through individual income setting and environment. This is one of the items that has led to significant changes in State income tax revenue structure, including increasing dependence on personal income tax receipts. In addition, a growing share of Illinois personal income is spent on services, rather than tangible goods that are subject to the State sales tax.
These changes have also affected certain forms of State revenue sharing and fiscal interaction with Illinois local governments and municipalities, including sales tax moneys forwarded to local governments as their ‘local share,” and corporate income surtax moneys traditionally collected by the State for forwarding to local governments through the corporate personal property replacement tax or PPRT. Many counties and municipalities have expressed concern about these trends, and these trends have been blamed in some quarters for rising local property tax rates to try to make up for alleged lost income.
CHICAGO
Chicago had zero cash balance at the end of 2024. While pubic-sector and private-sector operating entities usually want to maintain a cash balance in order to maintain a credit rating, at the end of Fiscal Year 2024 the City of Chicago had zero cash balance. Chicago, Illinois’ largest city, uses a fiscal year cycle that coincides with the calendar year; their reports for FY24 refer to their working-capital cash crunch as of 12/31/24.
The city’s chief financial officer (CFO) told the Chicago Sun-Times that the cash crunch had been caused by several factors, including heavy pension payments and a separate – but related – cash crunch at Chicago Public Schools (CPS). The City of Chicago and CPS have fiscal books that mesh with each other in different ways. The CFO added that Chicago has $6 billion in cash available to its in checkbooks other than its working cash balance. However, these funds were not characterized as rainy-day funds; they are made up of tax increment financing (TIF) funds, Chicago parking-meter-privatization funds, and other dedicated funds that are already encumbered and promised for other uses. By contrast, a true rainy-day fund is made up of unencumbered money that can be transferred and spent freely in the event of a fiscal emergency.
The credit rating firm S&P Global Ratings has assigned the low investment-grade rank of ‘BBB’ to City of Chicago general obligation bonds. This indicates a substantial risk that Chicago GIO debt may drop below investment grade in the near future. Other Chicago-related debts, such as debts owed by Chicago Public Schools (CPS), by the Chicago Transit Authority (CTA), or by O’Hare International Airport, bear separate, unrelated credit ratings. As of the first half of 2025 the CPS credit rating issued by S&P has dropped to “BB+,” which is below the investment-grade credit rating line; this “BB+” credit rating reflects a widespread belief in financial markets that the Chicago public school system is currently issuing junk bonds.
HIGHER EDUCATION
Rollout of direct admission to most Illinois public colleges and universities. Admissions to Illinois public higher education institutions will be primarily triggered by a student’s high school record, including grade-point averages, rather than initiated by filling out an admissions form. For eligible students, the process will be initiated by Illinois public colleges and universities, which are now authorized to send out preliminary offers of acceptance to qualified students. These students will receive an electronic notice informing them that they are eligible to continue a direct admissions process that has already been initiated for them.
While the direct-admission triggers will operate themselves, the public institutions are not calling this program an “automatic” admission to college. The new process, which will become effective for the Class of 2030, will continue to require active participation by a student after the direct admissions process has been initiated. The student groups eligible for the new direct admissions process will also include community college students; their two-year community college grades will be scanned for four-year college eligibility.
The University of Illinois Urbana-Champaign (UIUC), and the University of Illinois-Chicago (UIC) have chosen not to participate in the direct admissions process created by this new program. Students seeking admission to UIUC or UIC will be required to initiate an admissions application as they have in the past. The direct admissions program was enacted by HB 3522, which was approved by the Illinois House on May 30 by a vote of 103-10-0 and was signed into law as Public Act 104-15.
TRANSPORTATION
IDOT issues buckling pavement warning. Like many substances, the concrete of streets and highways expands in hot weather. These expansions, which can be worsened by prior cracks created by water erosion or frost, can cause previously-level concrete surfaces to lift or even buckle.
The Illinois Department of Transportation (IDOT) has issued a buckling pavement warning due to the recent heat wave across Illinois. A pavement buckle does not usually damage the foundation of the road, which means that the road damage can be repaired relatively quickly without the necessity to tear out and replace the entire roadway. A buckled pavement is typically closed off to motorists so that repairs can be made.
INDEPENDENCE DAY
Happy 4th of July! 249 years ago, our forefathers declared independence and established our great country. Since that day, America has been a beacon of freedom and democracy for the entire world. Happy 4th of July!