In December 2024, the city of Chicago narrowly passed a $17.1 billion fiscal year 2025 budget that included about $170 million in tax hikes on residents and businesses — from the flawed so-called “cloud tax” to higher amusement, rideshare, parking, and bag taxes, plus increased fines, fees, and penalties.
The cloud tax increase made Chicago one of the highest-taxed jurisdictions for cloud-based services among major cities.
And, just a few weeks ago, state legislators wrapped up their work in Springfield, approving a $55.2 billion fiscal year 2026 budget package, which, similarly, included more than $330 million in anticompetitive corporate income tax changes, along with new gaming taxes, short-term rental taxes, tobacco taxes, telecommunications taxes, and increased environmental fees.
The corporate tax changes in the budget, specifically the new taxation of Global Intangible Low-Taxed Income, will make Illinois’ corporate tax structure an anticompetitive outlier across the country and will, without a doubt, impact Illinois employers across various vital sectors, such as health care and manufacturing.
Indeed, these last two budget cycles raise concerns for both Chicago and Illinois taxpayers. These concerns are only exacerbated by the fact that we know that economic forecasts for future budget years project relatively more brutal budget realities, with some budget scenarios for the state of Illinois already projecting significant deficits for FY 2027 and the city of Chicago’s financial forecasting warning of an over $1.1 billion deficit in FY 2026 and a $1.3 billion deficit in FY 2027 — with more pessimistic outlooks forecasting a $1.6 billion deficit next year and a nearly $2 billion deficit in 2027. These are alarming warning signs.
It is true that forecasts only tell a story in a snapshot of time and typically account only for existing revenues and assumed market conditions. However, economic forecasts, like personal budgeting done on every kitchen table every week, month, or pay period, are good indicators of what is to come and should inform a degree of future-focused fiscal discipline.
And, at a time when residents and businesses across this state continue to struggle with rising costs of goods and services, lingering effects of record-high inflation, a sluggish labor market, and a general lack of confidence in the economy due to both domestic and international factors, Illinois residents and businesses, both large and small, demand that now, more than ever, elected officials focus on ensuring existing revenues (i.e., taxpayer dollars) are used more effectively and prioritize structural reforms. Reasonable cost efficiencies are actively considered and implemented.
We are living in uncertain times and, in many ways, trying to rebuild ourselves from the public health, safety, and financial challenges that the pandemic has caused and accelerated. Illinois business owners have shown a tremendous amount of resilience and determination over the past few years. Small businesses continue to lead the way in strengthening our communities and helping local economies recover even more strongly. But we cannot continue relying on job creators — and the families they support — to shoulder today’s ongoing challenges through new or higher taxes.
Illinois and the city of Chicago boast world-class educational, health care, infrastructure, and increasingly tech ecosystems that set us apart from others. However, we also face challenges in key areas, with CNBC’s “Top States for Business 2024” ranking Illinois 32nd in the nation for “Cost of Doing Business” and 42nd overall for the economy. When looking at our tax system, the Tax Foundation’s 2025 “State Tax Competitiveness Index,” which specifically assesses overall tax burden and major tax sources, ranks Illinois 37th overall, with the corporate tax burden at 42nd — our rankings on property taxes and unemployment insurance taxes are not much better. The Tax Foundation recently released a concerning report showing that recent corporate tax changes could make Illinois’ rankings even less competitive.
As a business owner and leader of one of the largest business organizations in the state, and as a Southeast Side native who grew up just a few blocks from the future site of the Illinois Quantum & Microelectronics Park, which aspires to build the world’s first utility-scale quantum computer, I implore our elected officials both at City Hall and in the state Capitol to focus on pro-growth and pro-business policies that expand our tax base and encourage new, innovative future investments by working with the business community to enact solutions that strengthen, rather than jeopardize, our economic future — especially as we confront looming challenges like pensions, transit, and energy policy.
Lou Sandoval is president and CEO of the Illinois Chamber of Commerce.
