Our lawmakers approved a state budget early today after working through the night. The enacted budget includes new business taxes and authorized less spending than the Governor requested.
The budget totals $55.9 billion and is supported by a similar amount of revenue. The spending plan includes an $830 million supplemental current-year spending plan, meaning that the upcoming fiscal year 2027 budget is essentially flat.
Specifics on the enacted tax law changes include…
Digital Asset Tax
It enacts a new 0.2% tax on digital asset transactions such as cryptocurrency trades and custodial transfers, for brokers with a physical presence in Illinois or for those with at least $100K in annual digital asset receipts.
Social Media & Gaming Taxes
It imposes a progressive monthly tax on social media companies based on their user counts. Lawmakers also established a licensing structure and a 15% tax on fantasy sports operators.
Remote Retailer Sales Tax
The law mandates that remote retailers and marketplace facilitators collect and remit state sales tax if their Illinois sales exceed $100K annually, regardless of any transaction count.
State Grocery Tax Elimination
The budget abolishes the state’s 1% sales and use tax on groceries. Retailers will now need to report grocery sales differently on sales tax returns.
Net Operating Loss (NOL) Changes
The Illinois budget extends and modifies the cap on NOL deductions, preventing corporations from immediately claiming their full losses to offset state taxes. Instead of fully phasing out the previous cap as originally planned, the budget extends a limitation on how much past corporate income losses can offset.
Further details on NOL changes include..
The Limit
Corporate carryover deductions are limited to either 15% of net income or $500,000, whichever is greater.
Gradual Phase-Out
To slowly unfreeze the losses, the allowed percentage increases over time: 30% in 2028, 50% in 2029, 65% in 2030, and 80% in 2031.
NOL Preservation
While the ability to claim the losses is delayed, the three-year suspension period does not count against the standard carry-forward limit.
Let me leave you with this…
Many are calling this new budget a win for conservative lawmakers. The main reason for the balanced budget is Springfield’s anticipation of further tax and revenue cuts from Washington.
Throughout the session, many called for new progressive revenue measures, including taxes on large corporations and billionaires. Others wanted Illinois to completely untie itself from parts of the federal tax code.
Others sought to include a few measures to address affordability.
Along those lines, it freezes the $0.013 cent gas tax increase slated for July 1st, pushing it to January. It also creates a sales tax holiday on school supplies from August 7-16.
The budget calls for transferring $150 million in sales tax revenue from gas to the General Revenue Fund once public transportation is fully funded. That revenue can now be spent for any purpose deemed necessary.
Oddly this is the exact dollar amount allocated for illegal immigrants and welcoming centers.
The Illinois House adjourned this morning without taking up a last-ditch Senate bill that would have allowed Arlington Heights or Chicago to form a public-private ownership deal with the Chicago Bears. This would have given the team a path forward to build a new stadium without paying property taxes on the facility.
Somehow the words “Hammond Bears” just don’t have a familiar ring.
But it’s probably something that we’ll all need to get used to. How does anyone capable of cognition allow a piece of business like that to cross the border without a fight?
Welcome to Illinois.
If you’re having any difficulties with your accounting or tax work, contact us today. We’d love to help.
We’re all going to get through this. Let’s get through it together…
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Chris Amundson
President
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