Illinois Legislative News: June 1, 2026
Third Reading Consulting Group
Springfield Update: 2026 Spring Session Wraps Up
The General Assembly wrapped up its spring legislative session in typical fashion — voting into the early hours of June 1st before adjourning. The headline is a record-breaking $55.9 billion FY2027 budget passed entirely along party lines, built on roughly $800 million in new taxes targeting digital economy and gaming sectors rather than broad-based individual tax increases.
Several high-profile items sputtered out at the goal line, and with a budget reliant on heavily litigated new revenue streams, Springfield’s work is far from finished. We are monitoring implementation timelines, regulatory rulemaking, and legal challenges across all areas below and will keep you informed as developments warrant.
The General Assembly announced the Fall Veto Session will be held on November 17-19 and December 1-3.
Bill Updates
- The Revenue Package: Digital Economy & Gaming Targeted
The revenue bill, SB 3019, passed with only Democratic votes and carries direct implications for several sectors:
Cryptocurrency & Digital Assets
Beginning January 1, 2027, a 0.2% tax on digital asset transactions and services covers exchanges, transfers, storage, and custodial services
Applies to businesses with a physical presence in Illinois or generating at least $100,000 in annual receipts from Illinois customers — national platforms could face obligations even if headquartered elsewhere
Compliance obligations fall on service providers, not individual users; Illinois may become an early national test case for taxing digital asset infrastructure broadly
Fantasy Sports & Prediction Markets
A new 15% tax on fantasy sports operators’ adjusted receipts was enacted under a newly created state licensing structure
Sports bets on prediction market websites will now face state taxation
The CFTC sued Illinois in April after state gaming regulators issued cease-and-desist orders against Kalshi, Polymarket, and Crypto.com — that federal preemption dispute remains unresolved and will continue to shape this space regardless of the new tax
Social Media & Digital Advertising
A progressive social media platform fee is projected to generate $200 million — platforms with at least 1 million users face a $165,000 base fee plus 50 cents per user per month; a similar Chicago tax is already in court
A Targeted Digital Advertising Tax framework was enacted but lawmakers are not counting on FY27 revenuegiven anticipated legal challenges — the goal is to have the structure ready to activate once litigation clears
Other Revenue Measures
Limits on corporate net operating loss deductions generate an estimated $300 million
The scheduled 1.3-cent gas tax increase was suspended until January 2027
Approximately $185 million in fund sweeps and $150 million in redirected motor fuel sales tax round out the package
- Bears Stadium — Brief Update
The session’s most-watched legislation failed. A last-minute Senate-approved substitute allowing larger Cook County municipalities to create stadium financing authorities (Bears privately financing construction, stadium exempt from property taxes) never received a House vote. Speaker Welch indicated discussions will continue this summer and a special session remains possible, though the Bears may announce a decision on Arlington Heights versus Hammond, Indiana before that occurs.
- Tech, AI & Data Centers
AI Safety: Illinois passed what is being described as the strongest AI safety legislation in the country, requiring major AI companies to establish safety standards subject to mandatory third-party audits. Clients procuring AI tools or operating AI-enabled platforms should assess vendor compliance obligations as implementation rules develop.
Data Center Incentives: Gov. Pritzker’s proposed two-year moratorium on data center tax incentives did not advance — existing incentives remain fully intact after organized labor pushed back hard. Electricity demand and grid impact concerns remain unaddressed; expect this to return in spring 2027.
Children’s Online Social Media Safety Act: Passed unanimously — requires platforms to hide minor accounts from adults by default, restrict algorithmically curated feeds to minors, and limit direct adult-to-minor messaging.
- Interchange Fee Prohibition Act (IFPA)
The budget package included a second consecutive one-year delay of the IFPA via SB 3645, pushing implementation to July 1, 2027
The law prohibits interchange fees on the sales tax and gratuity portions of card transactions and has now been delayed twice since its original 2025 effective date
Repeated postponements reflect ongoing OCC federal preemption activity and unresolved Seventh Circuit litigation
Even when implemented, the law’s practical reach will be significantly narrowed for national banks and federal savings associations due to federal preemption
State-chartered institutions and smaller players face continued uncertainty and potential competitive disadvantage relative to federally preempted peers
- Other Notable Actions
Rideshare Unionization (HB 5090): Makes Illinois the third state to grant rideshare drivers sectoral bargaining rights
Cannabis/Hemp Omnibus (SB 3222): Tightens hemp regulations, doubles cannabis possession limits, expands social equity licensing
Property Tax Debt Sale Reform: Passed, allowing homeowners to retain more equity before losing homes to tax sales
School Cellphone Ban: Statewide ban on phones during the school day takes effect fall 2027
Did not pass: The BUILD Act addressing the housing shortage, the data center incentive moratorium, and several Pritzker housing priorities
Important Upcoming Dates – Statewide
May 31 – Adjournment
November 3 – Illinois General Election