- Illinois closed fiscal year 2025 with record $54 billion in revenue.
- While that marked a surplus from the enacted budget, the extra revenue was anticipated when lawmakers approved the current-year budget in May.
- It doesn t give lawmakers any extra breathing room for an expected volatile fiscal year 2026.
The reporters and editors who worked on this story wrote this synopsis.
Fiscal year 2025 ended on June 30 with the state reaching a new record for annual revenue, despite economic and federal budget uncertainty during the second half of the year.
FY25 ended with $54 billion in income, the highest the state has ever earned in a fiscal year, according to data published by the independent Commission on Government Forecasting and Accountability. Additionally, when lawmakers passed a $53.3 billion budget in May 2024, the state’s revenue exceeded its initial projections by $717 million.
Overall, COGFA’s and the Governor’s Office of Management and Budget’s May predictions, which served as the foundation for the FY26 budget, closely match the final revenue figures. In other words, there were no shocks in June’s receipts, and as the new fiscal year gets underway, lawmakers aren’t sitting on any significant surplus.
Additionally, the record revenues don’t remove any uncertainty for the current or upcoming fiscal years as Congress contemplates significant cuts to state aid and the social safety net.
Causes of revenue growth
The Department of receipts’s true-up, which transferred business-related income tax receipts into the personal income tax category, was a major factor in the revenue gain in FY25, which was driven by strong personal income tax growth. While corporate income taxes decreased by 9.5%, personal income tax receipts increased by 10% compared to FY24.
Other sources of income grew very little as well. Although COGFA reported that sales tax revenue grew by almost 3% in the second half of FY25 after a bad start last summer as petrol prices plummeted and consumers reduced their significant purchases due to growing economic anxiety, sales tax revenue grew by less than 1%.
Even without accounting for the state’s one-time pandemic relief payments from FY24, federal revenue decreased 4.6% in FY25. However, COGFA discovered that state revenue sources increased more than expected, making up for the $178 million drop in federal funding.
There are still concerns regarding its performance in FY26 despite this year’s strong revenue growth.
Though the FY 2026 enacted budget forecasts revenues of $55.297 billion, over $1.3 billion above the FY 2025 final amount, it is unclear if this record will be broken in FY 2026, according to COGFA Revenue Manager Eric Noggle.
Bills paid and money left over
According to Comptroller Susana Mendoza’s office, the state also had $1.9 billion in cash in the General Revenue Fund at the end of the fiscal year after all bills were paid.
In a statement, Mendoza said, “Even in these uncertain times, we work hard every year to stress fiscal discipline, build up the state’s emergency reserves, and pay bills on time.” In the upcoming fiscal year, my office will continue to work toward improving the state’s finances and credit ratings.
The rainy day fund now has a balance of $2.5 billion after Mendoza’s office added $256 million to it. However, because lawmakers halted a monthly transfer that would have freed up $45 million, the fund is anticipated to grow more slowly in FY26.
Mendoza stated that she intends to pre-pay monthly pension payments for FY26 using the additional cash balance at the beginning of the new fiscal year. Last year, lawmakers authorized the comptroller to pay pensions early in the year instead of monthly when funds are available.
According to Mendoza, this will allow the systems to make appropriate plans and retain more money in their investment portfolios into the upcoming fiscal year.
An uncertain future
Now that FY25 has ended with positive news, focus is shifting to FY26, which started on Tuesday, and the enormous uncertainty the state confronts due to congressional budget negotiations and the economic consequences of Trump administration policies.
Midway through June, Governor JB Pritzker issued a $55.1 billion spending plan, which is based on $55.3 billion in income. Despite little growth in discretionary expenditure, it is the largest budget in the state’s history and is funded by $1.2 billion in one-time or tax hikes.
See also: Pritzker approves a $55.1 billion state budget that depends on $700 million in extra taxes
However, state lawmakers have left open the prospect that they will need to alter the budget if Congress makes adjustments to federal financing that require states to pay a larger share of government services and stop funding in some sectors.
As stated by Pritzker to reporters in Peoria on Tuesday, “The state’s ability to try to step in and try to mitigate the damage is somewhat limited, although we have the ability to do certain things and may have to in special session or we may have to in veto session.” It’s still a little difficult to tell. We’ll need to assess what adjustments are necessary to address this awful measure in Washington, D.C., since some of its provisions won’t take effect until the next year.
The state may be forced to shoulder additional costs if work requirements for food assistance and health care programs are removed, Medicaid reimbursements are reduced, and clean energy tax credits are eliminated.
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