IL Tax Hikes Start July 1: Here's What's Increasing

ILLINOIS — Taxes on several products and services are going up in Illinois starting July 1.

Illinois lawmakers passed a $55.1 billion budget for 2026, and the new hike is expected to bring about $1 billion in revenue to help balance the state's budget, according to a report from Fox 32 Chicago.

Here's a look at what taxes are increasing on the same day the new budget goes into effect:

Gasoline tax: The gasoline tax will go up from 47 cents to 48 cents per gallon, while the tax n diesel fuel will increase from about 54 cents to 55 cents.

Smoking products tax: The tax on nicotine products including cigarettes, tobacco and vaping products increases from 36 percent to 45 percent, expected to raise $50 million in revenue. The annual license fee for retailers of tobacco products will also increase from $75 to $150.

New sports betting tax: Thanks to a newly approved sports betting tax, betting sites will be taxed 25 cents for the first $20 million in wagers and 50 cents for each subsequent bet. The new tax is expected to raise $36 million for the state. To offset that cost, online betting sites FanDuel and DraftKings have said they will implement 50-cent transaction fees for Illinois customers, ABC reported.

Short-term rentals: Companies, including Vrbo, will begin paying the state's hotel-motel operators' tax, something Airbnb already voluntarily pays. The tax is estimated to raise $10 million in state revenue.

Telecommunications services: The tax on telecommunications, including messages through telephone services, computer services and cell phone services, ill increase from 7 percent to 8.65 percent. The increase is expected to bring another $50 million in state revenue to fund the state's 988 hotline.

Taxes on businesses: The largest sum of new tax revenue, $336 million, will come from businesses that move profits to other countries being subject to the state's corporate income tax, according to ABC7.