Illinois Legislative News: July 13, 2026
Third Reading Consulting Group
End of FY 2026 Revenue Update
Illinois closed Fiscal Year 2026 with total General Funds revenue of $56.300B, up 4.3% (or $2.302B) over FY 2025, marking the highest revenue total in state history for the second consecutive year. From a base revenue perspective, which factors out one-time revenues, the state finished FY 2026 at $56.297B, up 4.4% (or $2.364B) over FY 2025’s base total. A strong final month to the fiscal year bolstered year-over-year growth, with June revenue alone rising by 8.2% (or $432M) over June 2025, aided by an extra receipting day, with more than $300M arriving on the final receipting day of the year alone, a surge that may pull forward revenue otherwise due in early FY 2027.
Personal income tax was the largest dollar contributor to year-over-year General Funds growth, up 4.2% (or $1.402B) over FY 2025, largely due to sustained wage growth as well as gains from the Department of Revenue’s true-up reallocation process, which benefits personal income tax at the expense of corporate income tax and the non-General Funds personal property replacement tax. Despite a strong month in June, corporate income tax finished down 3.9% (or $250M) from FY 2025, largely reflecting changes from the federal One Big Beautiful Bill Act and the inverse impact of the true-up reallocation. Sales tax revenue grew 2.5% (or $533M) over FY 2025. After performing well through much of the fiscal year due to sustained inflation since the COVID-19 pandemic, sales tax revenues got a boost in the final quarter, likely reflecting higher motor fuel prices and other additional inflationary pressures resulting from the Iran war.
All other state revenue sources finished up a combined 8.1% (or $344M), led by a 44.4% (or $268M) surge in estate tax revenue. Transfers into General Funds also posted strong growth, up 24.3% (or $611M), led by a 176.7% (or $447M) increase in the Income Tax Refund Fund (ITRF) transfer and 90.1% (or $183M) growth in sports wagering transfers following the new per-wager tax. After adjustments in the FY 2026 and FY 2027 budget to the percentage of income tax collections reserved for the ITRF, the ITRF transfer is expected to decline relative to FY 2026 in the new fiscal year. Despite underperforming FY 2025 for much of the fiscal year, a strong close to the year brought federal revenues to a 3.8% (or $143M) year-over-year growth level. Even so, year-end federal revenues of $3.858B finished well below the FY 2026 enacted budget’s $4.2B estimated level.
At the time of passage, the FY 2026 budget assumed revenues of $55.297B. The Commission of Government Forecasting and Accountability (COGFA) then raised its estimate to $55.983B in March 2026 before slightly reducing it to $55.908B in May. The Governor’s Office of Management and Budget (GOMB), which has tended to project more conservatively than COGFA under Gov. JB Pritzker, increased their estimate above the enacted budget level in May to $55.673B. In the end, final FY 2026 revenues exceeded the enacted budget by 1.8% (or $1.003B), COGFA’s May estimate by 0.7% (or $392M), and GOMB’s May estimate by 1.1% (or $627M). Much of this outperformance was driven by growth above expectation from personal income tax, estate tax, and transfers into General Funds.
The enacted FY 2027 budget estimates revenues of $55.946B, slightly below the FY 2026 final figure. Major reasons why FY 2027 revenues are not expected to match their total from FY 2026 are a smaller true-up reallocation, which hurts personal income tax totals; a lower expected transfer from the ITRF; and lower projected estate tax collections.
Important Upcoming Dates – Statewide
November 3 – Illinois General Election
November 17-19 – Veto Session Week 1
December 1-3 – Veto Session Week 2