Illinois Legislative News: April 27, 2026
Third Reading Consulting Group
Megaproject Legislation Clears the House
House Floor Amendment (HFA) 3 to HB 910 (Buckner) was filed on April 22, creating a new version of the megaproject incentive program that the Chicago Bears have requested to facilitate the construction of a potential new stadium in Arlington Heights. Beyond the Bears’ new stadium, the megaproject incentive legislation could benefit other large-scale investments in Illinois by allowing businesses and local municipalities to negotiate property tax payments on qualifying projects.
The bill establishes a Payment in Lieu of Taxes (PILOT) incentive and project assessment freeze to provide a qualifying megaproject with long-term property tax certainty. The eligibility qualifications include an investment of at least $100M in eligible costs and the awarding of at least 20% of project-related contracts to minority-owned businesses. Investments from $100M to $500M qualify for a 25- to 30-year freeze, with a five-year environmental remediation buffer; investments from $500M to $1B qualify for a 30-year freeze; and investments of $1B or more qualify for a 40- to 45-year freeze, with environmental remediation provisions. One key change from earlier versions of the megaproject legislation is that HFA 3 reserves 50% of PILOT revenues and allocates that portion as follows: 60% directly to the local municipality to provide tax relief to residents in the megaproject area, and 40% to the Illinois Property Tax Relief Fund to provide direct rebates to taxpayers. The remaining 50% of the special payment revenue is distributed to municipalities for allocation to affected taxing districts. Earlier versions of the bill did not designate tax relief allocations.
Data centers are excluded from the incentive program, and the bill establishes ethical requirements for local government negotiations with potential projects. The legislation also expands the state’s Sales Tax and Revenue (STAR) bond program to include megaprojects. To qualify as a STAR bond district, megaprojects must have at least $30M in projected capital investment, be reasonably projected to create more than 300 jobs, and generate $60M in annual gross sales.
The bill creates New Opportunity for Vacation and Adventure (NOVA) districts and special urban district designations. To qualify, these projects must include at least 500 contiguous acres, produce at least $500M in capital investment, generate at least $300M in average annual gross sales, attract an average of one million annual visitors, and create an average of 1,500 annual jobs. The NOVA urban districts are designed for dense urban environments where land and infrastructure costs are high
Finally, the legislation creates the Railroad Rehabilitation and Economic Development for Yards (RREDY) Program, designed for blighted or underused railyards, railroad tracks, train maintenance facilities, and storage facilities. The program is limited to the City of Chicago and must be supported by an independent third-party feasibility analysis demonstrating that it creates a unique economic development opportunity and has the potential to generate at least $40B in aggregate tax revenue over 40 years. The project must also show that it can increase average daily boardings by 10,000, with at least 75% of project costs dedicated to infrastructure improvement.
HFA 3 to HB 910 merged the megaproject language with provisions from Sen. Doris Turner’s (D-Springfield) SB 3499. That legislation establishes the Capitol Area Tourism Authority, designed to support tourism, hospitality, business, commerce, and development in central Springfield. It creates a capital city jobs tax credit and allows the Authority to establish a STAR bond district and issue STAR bonds, among other provisions aimed at spurring downtown Springfield development.
On April 22, HB 910 passed the House Revenue and Finance Committee by a vote of 15-5-0 before advancing to the House floor, where it passed later in the day on a bipartisan roll call vote of 78-32-0. The bill now heads to the Senate for further consideration before the end of session. The current bill language appears likely to be reworked in the coming weeks based on ongoing stakeholder negotiations.
Millionaire Surcharge Proposal Considered by the House
The Illinois General Assembly is considering proposals to establish a “millionaire surcharge” by creating a constitutional amendment to institute an additional 3% state income tax on any resident’s income over $1M in a taxable year. The Illinois Constitution stipulates that “a tax on or measured by income shall be at a non-graduated rate” — a flat income tax rate — which is why an amendment is required to enact this proposal. The two proposals from Rep. La Shawn Ford (D-Chicago) are HJRCA 21 and HJRCA 26. Notably, House Speaker Chris Welch (D-Hillside) and House Speaker Pro Tempore Kam Buckner (D-Chicago) are both co-sponsors of HJRCA 21. Gov. JB Pritzker has also expressed support for the surcharge proposal but has indicated he will allow the General Assembly to act before involving himself more directly. While the Senate has not introduced a companion measure in 2026, the idea of a constitutional amendment to change the state’s income tax structure has been raised every year since the failure of the “fair tax” referendum on the 2020 election ballot.
Currently, Illinois has a flat personal income tax rate of 4.95%. While the state can and has historically updated its flat income tax rate, a graduated structure is constitutionally prohibited. In order to amend the Constitution, the proposal would have to receive a 60% supermajority vote in both the House (71 votes) and Senate (36 votes) and then receive support from the voters in a referendum. The referendum would need to receive the support of 60% of those voting on the question or a simple majority of all voters in the election.
The millionaire surcharge would generate significant additional revenue for the state, which supporters argue is needed more now than ever to offset impending federal cuts to Medicaid, SNAP, and threats to cut funding for other programs, many of which have been held up in court. Analysis from the left-leaning Illinois Economic Policy Institute found that the 3% tax on incomes over $1M would affect approximately 32,000 residents and generate an additional $1.86B in FY 2027, $3.82B in FY 2028, $4.02B in FY 2029, and $4.24B in FY 2030, without accounting for potential loss of income tax revenue from millionaires who may choose to leave the state following the tax increase. The debate among supporters of the surcharge centers on how to most effectively use the additional revenues. HJRCA 21 would divide revenue between property tax relief and education funding, while HJRCA 26 would dedicate the new funds solely to property tax relief.
Opposition to the proposal, largely from the business community, argues that the tax increase could drive many of Illinois’ largest individual taxpayers to leave the state for lower-tax locations. Many business tax revenues flow through the state’s personal income tax, so the surcharge could end up affecting over 22,000 businesses, many of which are small businesses, across the state. Opponents have additionally noted that over time, the $1M taxable income cutoff may become outdated due to inflation and changing economic conditions. If $1M in annual income no longer carries the same value it does today, the surcharge would generate additional revenue for the state at the expense of potentially middle-income earners.
It has now been six years since the “Fair Tax” constitutional amendment referendum failed in the 2020 election by a vote of 46.7% to 53.3%. Proponents of the Fair Tax have drawn a few key lessons from that experience. Most notably, they simplified the current proposal to affect only “millionaires” rather than pursuing a broad redetermination of the state income tax structure. Additionally, avoiding use of the word “tax” could make it more challenging for opponents to frame the proposal as a broad-based tax increase, as they successfully did with the Fair Tax.
After extensive debate, the House Revenue and Finance Committee passed HJRCA 21 on April 21 by a vote of 13-7-0. The constitutional amendment proposal did not receive consideration on the House floor before the House adjourned until May 5. Even if it passes the House, the Senate has not indicated whether it will take up the proposal before the end of session.
Important Upcoming Dates – Statewide
May 8 – Opposite Chamber Committee Deadline
May 22 – Opposite Chamber Third Reading Deadline
May 31 – Adjournment
November 3 – Illinois General Election