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One quarter into FY 2027, General Funds revenues are up 8.2% (or $1.023B) over the same period in FY 2026. Each of the “big three” revenue sources contributed to this strong start: personal income tax is up 1.9% (or $137M), corporate income tax is up 60.1% (or $695M), and sales tax is up 10.0% (or $305M). Federal sources are also up 8.0% (or $83M), and all other state sources are up a combined 5.9% (or $56M). Together, these gains have more than offset year-over-year declines elsewhere, including a combined 10.7% (or $70M) decrease in transfers in.
Illinois’ FY 2027 budget estimates $55.946B in revenue, a 0.6% decline from the final FY 2026 figure of $56.295B. Despite a conservative budget and a strong start to the year, it is too early to conclude that revenues will outpace the budget. The following factors could cause year-over-year revenue declines or lower-than-budgeted collections from new sources. However, if current collection levels continue, Illinois will have built a strong buffer against these expected declines.
- Reduced Income Tax Refund Fund transfers: an estimated $649M decline by the end of FY 2027.
- True-up adjustments: an estimated $492M decline by the end of FY 2027.
- Lower estate tax collections following the November 2025 outlier: an estimated $120M decline, which growth in other months could mitigate.
- Legal challenges to new state taxes and fees: an estimated $260M revenue loss due to lawsuits and delays in implementing the Digital Asset Tax and the Social Media Platform Fee.
Reduced Income Tax Refund Fund (ITRF) Transfers
Income tax is the state’s primary source of tax revenue. A portion of income tax collections is deposited into Illinois’ Income Tax Refund Fund (ITRF), which is dedicated to paying corporate and individual income tax refunds. Each year, the General Assembly adjusts the percentage of income tax collections deposited into the ITRF. This allows the General Assembly to better match deposits to anticipated refund needs and to reduce the amount that must be transferred back to General Funds in future years.
In September, $51M was transferred from the ITRF to the General Revenue Fund, the only ITRF transfer expected in FY 2027. Compared with the $700M received in FY 2026, this represents a $649M year-over-year decline, which was anticipated and built into the FY 2027 budget.
True-Up Adjustments
True-up adjustments are part of the Illinois Department of Revenue’s annual reconciliation of business-related tax payments. After three years of larger-than-usual true-up reallocations from FY 2024 through FY 2026, true-up adjustments are expected to return to a more typical historical level in FY 2027, producing a $492M year-over-year decline in General Funds revenues. The FY 2027 true-up adjustments will yield a net General Funds increase of $48M, following increases of $708M in FY 2024, $881M in FY 2025, and $540M in FY 2026. Because the true-up process spans multiple fiscal years, its impact can be planned for in the annual budget process. True-up adjustments are expected to remain near their FY 2027 level in the coming years, avoiding major one-time year-over-year revenue declines.
Lower Estate Tax Collections
The Commission on Government Forecasting and Accountability projects a year-over-year decline in estate tax revenues in FY 2027. This decrease is largely due to an outlier month in November 2025, when collections rose roughly 200% (or $180M) over November 2024, reaching about triple the 12-month average of approximately $60M. Although estate tax collections should, in theory, rise each year as average estate values grow, November 2026 collections closer to the $60M average would produce a decline of approximately $120M from FY 2026. One quarter into FY 2027, estate tax collections are down 1.4% (or $3M) from the same point last year. If collections in the remaining months exceed their FY 2026 levels, some of the anticipated November decline could be mitigated.
Legal Challenges to New Taxes
Illinois’ FY 2027 budget added revenue from a new Digital Asset Tax, Social Media Platform Fee, Targeted Advertising Services Tax, and Prediction Markets Exchange Wager Tax. The Digital Asset Tax and the Social Media Platform Fee, which were expected to generate $60M and $200M, respectively, in FY 2027, face delays due to ongoing litigation. State officials have announced that, while the court disputes continue, they will delay implementation of the Digital Asset Tax from January 1, 2027, to July 1, 2027. The delay is pending judicial approval; if approved, it would ensure a $60M revenue loss in FY 2027. Some of these losses could be offset if courts uphold the Targeted Advertising Services Tax and the Prediction Markets Exchange Wager Tax. The state did not attach revenue estimates to either tax because of the likelihood of legal challenges.
Important Upcoming Dates – Statewide
November 3 – Illinois General Election
November 17-19 – Veto Session Week 1
December 1-3 – Veto Session Week 2
In the News
Illinois midterm elections: What to know about the key races — and where to vote – Chicago Tribune, October 23, 2026
Illinois voters will decide Nov. 3 who will replace retiring U.S. Sen. Dick Durbin and whether Gov. JB Pritzker wins a third term.
Gov. JB Pritzker doling out big bucks to help Democrats — and boost a 2028 presidential run – Chicago Sun Times, October 23, 2026
Illinois Gov. JB Pritzker is pouring millions into some of the country’s most consequential midterm races that could determine just how much President Donald Trump can accomplish in his final two years in office — efforts that will also help the governor in a potential 2028 presidential bid.
Lawmaker ‘ghosted’ by DCFS considers lawsuit – Central Square Illinois, October 22, 2026
An Illinois legislator says it is scary regardless of cost if the Illinois Department of Children and Family Services is sending unqualified people to conduct investigations.
52nd Illinois House candidates differ on cash bail, school choice and Bears – Daily Herald, October 22, 2026
The race for the 52nd District Illinois House seat is a rematch between incumbent Republican state Rep. Marty McLaughlin and Democratic challenger Maria Peterson.
Illinois 4th District race: Chuy García’s handpicked successor Patty García defends path to Congress – Chicago Tribune, October 22, 2026
Patty García’s path to Congress was paved long before Election Day.
Stratton, Tracy clash over Trump, affordability in lone U.S. Senate forum – Capitol News Illinois, October 21, 2026
Democratic Lt. Gov. Juliana Stratton vowed to serve as a check on President Donald Trump while Republican Don Tracy largely defended the president’s positions in their only face-to-face meeting in the race to succeed retiring Democratic U.S. Sen. Dick Durbin.
Eye On Illinois: Feeling purple? Majority parties aren’t looking to expand ballot field – Shaw Local, October 21, 2026
It’s October, which means my TV is tuned exclusively to playoff baseball. And it’s an even year, which means each commercial break includes at least one campaign spot.
Democrats hoping 3rd time’s the charm against McLaughlin in 52nd House – Lake County Chronicle, October 21, 2026
Things aren’t looking good for Illinois Republicans in general this election cycle, and in State Rep. Marty McLaughlin’s 52nd House District in particular.
Turner trying to stave off challenge from Lesko in senate campaign – The State Journal-Register, October 21, 2026
Frank Lesko, the Republican challenger in the 48th District Senate campaign, wants to downsize government the way the way he put himself out of a job — as Sangamon County recorder — on Dec. 1.
Illinois first lady MK Pritzker commits $500,000 to Ohio’s Amy Acton after Ramaswamy ad featuring her mother – Chicago Tribune, October 21, 2026
Illinois first lady MK Pritzker, who typically shies away from the political spotlight, announced Wednesday she is contributing $500,000 to support Ohio Democratic governor candidate Amy Acton after the campaign of Acton’s Republican opponent, Vivek Ramaswamy, released a controversial video featuring her estranged mother.
Downstate legislative races may be close – The Center Square, October 20, 2026
With tight races for the Illinois General Assembly taking place across the state, some downstate races receive less attention than some of the races in the Chicagoland area – even as many downstate races may be just as close this year.
Bailey challenges Pritzker over costs, safety in governor race rematch – The Daily Egyptian, October 20, 2026
The cost of living is a central issue in Illinois’ Nov. 3 governor’s race, with Democratic Gov. JB Pritzker and Republican challenger Darren Bailey offering different plans to address housing costs, utility bills and taxes.
Pritzker expects just “a few specific items” in veto session, says ethics reform more likely next year – Capitol Fax, October 20, 2026
Gov. JB Pritzker was asked today whether ethics reform would be a priority during veto session during an unrelated press conference.
Doody, Markel offer competing visions for 118th District – The Daily Egyptian, October 20, 2026
As the Nov. 3 election approaches, voters in the 118th District will ultimately decide which vision they prefer for their state representatives: Chip Markel’s call for greater investment in working families and public services, or Scott Doody’s focus on property tax relief, tourism and infrastructural development.
Illinois Democrats eye suburbs in push to expand supermajorities – Capitol News Illinois, October 20, 2026
If Illinois Republicans are to chip away at Democratic supermajorities in the General Assembly, winning Chicago’s suburbs will be essential. But the state’s Democrats also see those races as the ticket to expanding their power.
Pritzker: Unethical pols should “self select” out of office – The Center Square, October 20, 2026
Gov. J.B. Pritzker says unethical public officials should self-select themselves out of office if they choose to break the law.
Pritzker celebrates high-achieving schools as funding gap grows – The Center Square, October 20, 2026
Gov. J.B. Pritzker celebrated the “best of the best” in Illinois education Tuesday, awarding 24 schools the Governor’s Blue Ribbon award amid a backdrop of widening state funding gaps and lagging math and reading scores.
In Illinois’ only faceoff for US Senate, Tracy backs Trump’s policies and Stratton vows to stand up to president – Chicago Tribune, October 20, 2026
The two major-party candidates for Illinois’ open U.S. Senate seat clashed Tuesday night over the war in Iran, immigration and affordability, with Republican Don Tracy largely embracing President Donald Trump’s policies and Democrat Juliana Stratton pledging to check presidential power.
26th Senate District preview: Hills, Syed in only matchup of incumbents – Capitol News Insider, October 19, 2026
Rep. Nabeela Syed, D-Inverness, is looking to elevate herself to the Senate by ousting appointed Sen. Darby Hills, R-Barrington Hills, in the 26th Senate District.
Taxes, state spending issues in key Chicagoland statehouse races – The Center Square, October 19, 2026
Two weeks from the midterm election, some statehouse races are close, potentially putting some Chicagoland-area GOP seats at risk of flipping and creating more of Democrat dominance in Illinois.
After deferred prosecution agreement and contested primary, Sen. Emil Jones III faces Republican challenger – Chicago Tribune, October 19, 2026
After decisively fending off two challengers in the Democratic primary, Sen. Emil Jones III will face Crestwood Trustee Brian Skala in the general election to represent the 14th District in the state Senate.
‘In my heart, I’m a legislator’: Daniel Biss reflects on time as mayor, city’s future in exit interview – Evanston Round Table, October 19, 2026
Daniel Biss began his political career as a legislator, representing Evanston and other surrounding communities in Springfield first as a state representative and then as a state senator.
Third party Illinois candidates claim collusion prevented debate appearances – The Center Square, October 18, 2026
Third-party candidates in multiple statewide races are criticizing their leading opponents and a Chicago area PBS station after being excluded from the only debates in their races ahead of election day.
Illinois voters deserve to hear from every candidate – The Intelligencer, October 17, 2026
When Illinois voters head to the polls this November, they’ll find three candidates on the ballot for governor and three candidates for U.S. Senate.
Beekman, Halpin face off in Illinois senate district 36 race – Quad-City Times, October 17, 2026
A former Illinois State Patrol master sergeant will be attempting to unseat a longtime legislator in Illinois.
Interim legislative inspector general is no-nonsense, ready to get down to business – Chicago Sun-Times, October 16, 2026
The Legislative Ethics Commission chair said last week that the commission will meet soon and discuss whether to recommend changes to state ethics laws during the upcoming veto session, which begins in about a month.
Editorial: Brandon Johnson won’t force the city’s unions to help solve his budget crisis. But help they must. – Chicago Tribune, October 23, 2026
When it comes to finding solutions to Chicago’s $880 million budget shortfall for 2027, where are the unions that represent city workers?
Johnson pokes the business bears – Politico, October 22, 2026
Mayor Brandon Johnson unveiled his 2027 “Fair Share Budget” on Wednesday, pitching a plan that would raise new revenue from large corporations while investing in youth jobs, violence prevention, affordable housing and neighborhood services.
Eye On Illinois: Can dwindling coal market lessons inform long-term data center planning? – Shaw Local, October 22, 2026
Ignorance isn’t bliss, though believing otherwise is awfully convenient.
Mayor Brandon Johnson: Loving Chicago means fighting for what Chicagoans deserve – Chicago Tribune, October 21, 2026
On Wednesday morning, I presented my 2027 budget proposal to the City Council.
Business groups vow to block Mayor Johnson’s latest try at a head tax and a 20% cloud tax – Chicago Sun-Times, October 21, 2026
Chicago is careening toward a pre-election budget stalemate after Mayor Brandon Johnson’s $17.6 billion spending plan landed like a thud Wednesday in a City Council dead-set against his revived corporate head tax.
Mayor Johnson renews fight for his failed corporate head tax – Chicago Sun-Times, October 20, 2026
Mayor Brandon Johnson is resurrecting his failed corporate head tax and proposing his third and biggest increase yet in a tax on equipment rentals and cloud computing that is already the highest in the nation.
Giannoulias, Quigley, Wilson — But Not Johnson — Among First to File Signatures Ahead of Chicago’s February Mayoral Election – WTTW, October 19, 2026
The first batch of candidates seeking to deny Mayor Brandon Johnson a second term each filed tens of thousands of signatures Monday to officially get on the Feb. 23 ballot, waiting in line for hours among aspiring alderpeople, staff members, lawyers and candidates for other offices.
Giannoulias opens big lead in Chicago mayoral poll as Johnson loses support – Crain’s Chicago Business, October 19, 2026
Illinois Secretary of State Alexi Giannoulias has opened a sizable early lead in the race for Chicago mayor, while incumbent Brandon Johnson is struggling to retain even the voters who elected him, according to a new University of Chicago poll.
Supreme Court passes on Chicago parking-ticket case, but two justices sound alarm – Crain’s Chicago Business, October 19, 2026
The U.S. Supreme Court today declined to take up a challenge to the city of Chicago’s policy of immobilizing and confiscating all vehicles registered to an owner with as few as two unpaid parking tickets, with two justices expressing “serious concerns” about the city’s “vast and lucrative” vehicle-forfeiture system.
Chicago mayor poll: Brandon Johnson’s approval at 22% and early excitement for Alexi Giannoulias – Chicago Tribune, October 19, 2026
As candidates line up Monday and begin filing petitions to appear on Chicago’s Feb. 23 municipal ballot, Mayor Brandon Johnson’s bid for a second term faces strong headwinds, with Chicagoans at large disapproving of his job performance and likely voters showing little enthusiasm for him seeking reelection, a new poll found…