Illinois Revenue Collections Exceed Expectations as Trump Budget Threatens Future State Funding
Illinois State Tax Collections Surge $1.6 Billion in Third Quarter, Corporate Receipts Still Suffer From Federal Cuts
State government revenues climbed $1.571 billion in the third quarter of fiscal year 2026, significantly outpacing the 2.3 percent growth the Illinois budget anticipated for the full fiscal year.
The Illinois Commission on Government Forecasting and Accountability reported the revenue increase represents a 4.2 percent jump over the same period last year. Personal income tax collections alone rose $1.1 billion, or 4.9 percent, while sales tax collections increased $363 million, or 4.2 percent.
State government revenues were up $1.571 billion at the end of the third quarter, according to the most recent report from the legislature's bipartisan, bicameral Commission on Government Forecasting and Accountability. The almost $1.6 billion in new revenues is an increase of 4.2 percent.
The commission had revised its projected revenue estimates upward by $684 million in March, but the actual performance exceeded those projections. Deposits into the state's General Fund remain up $1.6 billion through March 31.
However, corporate tax collections tell a different story. Corporate income tax receipts declined $209 million, or 6.3 percent, compared to last year. State officials had originally projected corporate tax collections would increase by 10.8 percent when the state budget passed before Congress enacted massive federal tax cuts last summer.
Many of our state corporate taxes are tied to federal laws. As of now, those corporate receipts are down 6.2 percent for the year, but they were projected to increase by 10.8 percent when the state budget was passed before Congress slashed so many corporate taxes.
Sales tax, estate tax, insurance taxes, gaming taxes, and sports wagering collections all posted double-digit growth. Sports wagering tax collections specifically jumped 109.8 percent, while gaming tax collections increased 43 percent.
Trump's 2027 Budget Proposal Threatens Illinois Funding
President Donald Trump recently unveiled a proposed budget for Fiscal Year 2027, which begins October 1. The proposal includes substantial cuts to federal programs that Illinois depends on, including infrastructure projects, public schools, higher education, and social services.
The Trump administration's FY2027 budget would eliminate the Low Income Home Energy Assistance Program, reduce public school funding by $8.5 billion, cut higher education funding by $2.7 billion, and slash Medicaid and nutrition assistance programs.
The proposal would slash funds for infrastructure projects by $15.2 billion, reduce public school funding by $8.5 billion, eliminate the program to help low-income households with utility bills, cut higher education funding by $2.7 billion, reduce law enforcement and public safety programs by $1.7 billion, cut homelessness grants by $393 million, eliminate the school meals program, etc.
Trump told a private audience that childcare, Medicaid, and Medicare should all be state-funded responsibilities.
The United States can't take care of daycare. That has to be up to a state. We can't take care of daycare. We're a big country. We have 50 states. We have all these other people we're fighting wars with. We can't take care of daycare. You've got to let a state take care of daycare. And they should pay for it, too. They should pay. They have to raise their taxes, but they should pay for it. Medicaid, Medicare, all these individual things. They can do it on a state basis. You can't do it on a federal.
Illinois officials remain concerned about the impact on the state's fiscal health. The commission cautioned that April revenue figures can be volatile and difficult to predict due to timing of tax payments and the Personal Property Replacement Tax true-up process.
Without changes to decouple state corporate tax laws from federal legislation, corporate tax receipts will likely continue to decline. The commission also noted potential economic uncertainty from international conflicts and their impact on energy markets.
What Comes Next
The state budget was crafted with an expectation of modest revenue growth, making the third quarter performance particularly strong. However, the remaining three months of the fiscal year remain uncertain.
State officials are watching the federal budget proposal closely, as it could significantly impact Illinois funding levels in the coming fiscal year. The state may need to adjust its own budget planning if federal transfers continue to decline.
Sources
- Illinois Times, Rich Miller, April 13, 2026
- Muddy River News, Rich Miller, April 12, 2026
- NFIB, April 10, 2026