New Study Says Millionaires Tax Could Fund Illinois Property Tax Relief and Public Education

A new study from the Illinois Economic Policy Institute and the University of Illinois at Urbana-Champaign projects that a surtax on millionaires could generate billions in annual revenue while providing property tax relief or fully funding public schools.

The report, released in April 2026, suggests a 3% additional tax on Illinois residents earning $1 million or more per year would generate approximately $3.8 billion in fiscal year 2027 and could reach $5 billion annually by fiscal year 2033.

The study proposes three different options for how the state could use the new revenue. Each option comes with specific projections about what homeowners and students could gain.

The Numbers Behind the Proposal

The research team analyzed different scenarios to determine the impact of a millionaire tax paired with a lockbox mechanism that would dedicate the new revenue to specific purposes.

Option one would provide a $1,500 annual rebate to approximately 3 million Illinois homeowners. This approach would cost around $4.6 billion and would cut the average property tax bill by approximately 15 percent at first. About 1 million of those homeowners live in Cook County with approximately 870,000 in the collar counties surrounding it.

Option two would use the revenue to fully fund public school districts statewide. The researchers highlighted that state funding of public education in Illinois lags behind other states, forcing many public school districts to rely heavily on property tax revenue. Public school districts typically represent the largest portion of a homeowners property tax bill at about 62 percent on average.

Illinois currently faces an adequacy gap of approximately $3.1 billion in school funding statewide. The more than $3.8 billion generated by a millionaire tax could cover that entire gap, with the remaining $600 million potentially available for property tax relief grants or making community college tuition free.

Option three would split the money between property tax relief and public education funding. The researchers propose dedicating between $700 million and $900 million per year specifically to cover additional property tax revenue that would otherwise be needed for school funding.

How the Tax Would Be Passed

Illinois would need to change its constitution to implement a millionaire tax because the current state income tax structure requires flat rates rather than graduated rates.

The process would require two major steps. First, the state General Assembly would need to pass a bill allowing a change from a flat rate to a graduated rate. Sixty percent of members in both the state House of Representatives and Senate would need to approve such a bill.

An amendment to the state constitution would then go to voters in an election. The change would require either 60 percent of all voters to approve or a simple majority of 50 percent plus one of all voters who cast ballots.

A similar effort to change the state constitution to allow a graduated income tax failed in 2020. The Fair Tax Amendment sought to raise the tax rate starting on incomes of $250,000 and did not come with a promise to dedicate the added revenue to a specific issue. Voters rejected that measure 47 percent to 53 percent.

Legislative Action Already Underway

The League of Women Voters of Illinois has proposed HJRCA21, which adds 3 percent to the individual income tax rate for incomes over $1 million. The proposal requires the resulting funds to be distributed 50/50 between property tax relief and education funding.

HJRCA21 is estimated to raise $4.5 billion in the second year of implementation. The League of Women Voters called on lawmakers to consider this approach as a way to address the states major fiscal issues including revenue for schools, pensions, cuts to federal funding, and the high property tax burden on homeowners.

Democratic House Speaker Chris Welch has backed the millionaire surcharge as a way to address funding challenges facing the state.

Governor Pritzkers Response

Governor JB Pritzker has pushed back on calls for property tax reform, stating that property taxes are determined by local governments rather than the state of Illinois.

Pritzker blamed previous lawmakers and governors for failing to adequately fund schools, which led to an overreliance on property taxes. He noted that when he became governor, Illinois had the lowest percentage of education funding coming from the state compared to any other state in the United States.

One of his purposes was to alleviate the burden on local governments, local school boards, and people paying property taxes locally. However, Pritzker blamed local school boards for failing to reduce property taxes despite increased state funding.

Pritzker acknowledged that increased income taxes on wealthy individuals could reduce the property tax burden to a point. He estimated that whatever gets proposed would probably not entirely be dedicated to property tax relief, but even if it were a couple of billion dollars, you are still talking about $37 billion of property taxes being alleviated by a couple of billion dollars of state money.

He emphasized that it takes many approaches to reduce the burden of local property taxes, including addressing pensions and dealing with multiple angles.

Economic Impact Projections

The researchers argued that states that have passed similar tax increases on higher earners also saw economic benefits. They suggested that focusing on education and property taxes could help stimulate the states economy by at least $1 billion and create thousands of jobs over several years.

Robert Bruno, a professor at UIUC and one of the studies authors, said this was a unique topic that intersects with other policy issues that impact the health and welfare of the state. That makes it an ideal issue to address.

Public Support

In a 2024 advisory referendum, 61 percent of voters said they would approve of a 3 percent tax on millionaires specifically to provide property tax relief. The study noted that such an idea appears to have popular support in the state.

The researchers proposed three options for how to spend the new revenue, with each option having specific benefits for different groups of Illinois residents. The lockbox approach would ensure the money goes directly to property tax relief, education, or both rather than becoming part of the general fund.

The study represents one of the most comprehensive analyses of a millionaire tax proposal for Illinois to date. It provides specific numbers and projections that lawmakers and voters could use to understand the potential impact of such a tax.