Despite ongoing concerns about the economy and potential federal funding cuts, Illinois closed its fiscal year 2025 with a record-breaking revenue total of $54 billion, according to figures from the independent Commission on Government Forecasting and Accountability (COGFA). This marks the highest revenue the state has ever collected in a single fiscal year.
The impressive total exceeded the initial budget of $53.3 billion by $717 million, with projections from both COGFA and the Governor’s Office of Management and Budget aligning closely with the final numbers. As a result, Illinois enters FY26 without any substantial surplus, and the new fiscal year begins amid continued federal uncertainty, especially regarding potential reductions in social safety net programs and state aid.
The revenue growth was primarily driven by a 10% increase in personal income tax, largely due to a “true up” adjustment by the Department of Revenue that reclassified business income tax revenue into personal income taxes. Conversely, corporate income taxes declined by nearly 10%, and sales tax revenue grew by less than 1%, though it showed signs of recovery in the latter half of FY25.
Federal income also fell by 4.6%, excluding pandemic relief funds received in FY24. However, state revenue sources grew more than expected, offsetting federal declines by approximately $178 million.
Looking ahead, concerns remain about whether FY26 will continue this upward trend. COGFA’s Revenue Manager, Eric Noggle, noted that the enacted FY26 budget assumes revenues of nearly $55.3 billion—about $1.3 billion above FY25’s final total—though whether this will be achieved remains uncertain.
The state ended FY25 with a cash balance of $1.9 billion in the General Revenue Fund, supported by a $256 million contribution to the “rainy day” fund, which now totals $2.5 billion. Due to the surplus, Illinois is pre-paying pension obligations for FY26 to help systems plan more effectively.
Governor JB Pritzker signed a historic $55.1 billion budget in June, relying on $55.3 billion in revenue, which includes $1.2 billion from tax increases and one-time revenues. However, looming federal funding cuts—such as reduced Medicaid reimbursements and the elimination of clean energy tax credits—could force the state to adjust its plans, as lawmakers remain cautious about the economic impact of federal policy decisions.
Governor Pritzker emphasized the limited ability of the state to mitigate potential damage from federal changes, noting that some provisions in Washington, D.C., “don’t go into effect until next year,” and will require careful evaluation and possible legislative action.
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