Illinois Insights Special Edition: 2026 Session Recap

Overview

The Illinois General Assembly approved a $55.9 billion budget in the early morning hours of Monday, June 1, 2026. The more than 3,700-page operating budget, along with its accompanying implementation measure and revenue package, were introduced and passed in the final 48 hours of session.

The operating budget (House Bill 111) was approved around 3 a.m. in the Senate by a 37-21 vote with three Democrats—Senators Christopher Belt, Suzy Glowiak Hilton, and Doris Turner—joining Republicans in opposition. The House then approved the measure at approximately 4 a.m. by a 76-39 party-line vote.

The revenue package (Senate Bill 3019) passed the House by a 73-41 vote, with Democratic Representatives Lawrence “Larry” Walsh, Jr. and Anthony DeLuca joining Republicans in opposing the measure. The Senate approved the revenue plan by a 36-19 vote, with Senators Belt, Glowiak Hilton, and Turner not voting and Senator Meg Loughran Cappel voting against the bill. The budget implementation bill (House Bill 2949) passed the Senate by a 37-18 vote with Democratic Senators Belt, Glowiak Hilton, and Turner not voting. The House then approved the measure 76-39, with Representative Lindsey LaPointe (D) not voting and Joyce Mason (D) and Amy Grant (R) excused.

Local governments avoided a proposed reduction in funding through the Local Government Distributive Fund (LGDF). Governor JB Pritzker proposed lowering the share of state income tax revenues distributed to local governments from 6.47% to 6.23%, which was estimated to reduce local funding by approximately $60 million. The final budget maintains the LGDF distribution at 6.47% following advocacy from local officials. In addition, the approved plan pauses a scheduled increase in the state’s Motor Fuel Tax. The tax was set to rise by 1.3 cents on July 1 but will now be delayed for six months, pushing the increase to January 2027.

On Monday morning, just hours after the legislature adjourned, Governor Pritzker held a press conference outlining the budget, emphasizing its focus on affordability for working families, long-term fiscal stability, and funding the state’s core obligations. The governor noted that the budget reflects ongoing efforts to sustain fiscal discipline while navigating economic uncertainty and potential federal funding challenges.

Key details on the budget and revenue measures, as well as other notable bills that passed the General Assembly this session, are highlighted below.

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Budget & Appropriations

The Fiscal Year 2027 budget maintains funding for several of the state’s core priorities, including pensions, K-12 education, higher education, and social services, while continuing targeted investments in housing and health care programs.

Education

The budget includes the full $350 million increase required under Illinois’ Evidence-Based Funding (EBF) formula for K-12 education, bringing total EBF funding to approximately $9.2 billion. Overall funding for the Illinois State Board of Education totals just over $10.8 billion, reflecting an increase of approximately $120 million above the governor’s proposed budget.

The spending plan also provides $721.5 million for the Monetary Award Program (MAP), maintaining current funding levels and representing an increase of approximately $320 million, or 80%, since 2019. In addition, the budget restores $47 million in property tax relief grants under the school funding formula for districts with higher tax rates. Smaller investments include $1.5 million to support implementation of the Illinois Comprehensive Literacy and Numeracy Plans.

Health & Social Services

The budget establishes the Families Receiving Emergency Support for Hunger (FRESH) Program, appropriating $70 million to provide temporary food assistance to Illinois residents who lose Supplemental Nutrition Assistance Program (SNAP) benefits due to new federal work requirements. Eligible individuals experiencing a full or partial loss of SNAP benefits will receive a one-time $400 payment. Funding for the program is supported by a transfer of $70 million from the BRIDGE Fund to the Fund for Illinois’ Future. In addition, the budget maintains funding for health care coverage for older immigrants without legal status and for immigrant welcoming service centers. The budget also establishes a new $5 million General Revenue Fund deposit into the Medical Debt Relief Pilot Program Fund.

Housing

The budget includes approximately $250 million in funding for housing initiatives administered through the Illinois Housing Development Authority (IHDA) and the Department of Commerce and Economic Opportunity (DCEO). This includes $100 million for a new Missing Middle Housing Infrastructure (M2I) Grant Program at DCEO, $100 million for missing middle and other affordable housing programs at IHDA, and $50 million for the Opening Doors and SmartBuy down payment assistance programs.

Pensions

The budget fully funds the state’s required pension contribution, continuing scheduled payments toward long-term pension liabilities. The Fiscal Year 2027 spending plan includes approximately $11.64 billion in contributions across the state’s five retirement systems, including $6.74 billion for the Teachers’ Retirement System, $2.35 billion for the State Employees’ Retirement System, and $2.38 billion for the State Universities Retirement System. Additional contributions include approximately $154.17 million for the Judicial Retirement System and $25.65 million for the General Assembly Retirement System.

Revenue Omnibus

To help fund the $55.9 billion spending plan, the General Assembly approved a revenue package that includes new taxes on digital advertising, prediction markets, cryptocurrency, and social media platforms, as well as various changes to corporate tax structures.

A central component of the package is a new Social Media Platform Fee, projected to generate approximately $200 million annually. Beginning January 1, 2027, social media platforms must report their average number of Illinois users each month and pay a graduated fee based on their user base. Platforms with more than 100,000 but fewer than 500,000 Illinois users will pay $0.10 per user per month. Those with between 500,000 and 1 million users will pay a base amount of $40,000 plus $0.25 per user above 500,000, while platforms exceeding 1 million users will pay $165,000 plus $0.50 per user above that threshold.

The package also establishes a Targeted Advertising Services Tax, commonly referred to as a digital advertising tax. Beginning January 1, 2027, the state will impose a 10% tax on the gross receipts of companies providing targeted advertising services to users in Illinois. The tax applies broadly to digital advertising formats, including search, display, and social media advertising, for businesses with more than $1 million in annual Illinois receipts from such services. The legislation restricts taxation authority to the state level, precluding local governments from imposing similar taxes. However, lawmakers did not incorporate projected revenue from this source into the budget, citing anticipated legal challenges.

In addition, the revenue package creates a Digital Asset Tax expected to generate approximately $60 million annually. Beginning January 1, 2027, the tax applies a 0.2% rate on the value of digital asset transactions conducted on behalf of Illinois customers. The tax covers activities such as exchanging, transferring, or storing digital assets and requires digital asset brokers, including exchanges and other intermediaries, to collect and remit the tax to the state.

The legislation also includes modifications to corporate taxation through a provision capping net operating loss (NOL) deductions, projected to generate approximately $300 million. Under the new framework, businesses may claim NOL deductions up to the greater of $500,000 or 15% of net income in tax year 2027, with the allowable percentage gradually increasing in future years until reaching 80% by 2031.

Another revenue change involves decoupling from the federal Qualified Small Business Stock Exclusion, which is expected to generate between $50 million and $60 million annually. By decoupling from federal tax law, Illinois will begin taxing certain capital gains from qualifying small business stock that are otherwise exempt at the federal level.

The package further introduces new taxes on emerging gaming and digital wagering markets. This includes a Fantasy Contests Tax, projected to generate approximately $5 million, which imposes a 15% tax on adjusted gross receipts earned by fantasy contest operators offering paid contests of skill, effective July 1, 2026. The legislation also establishes a tax on prediction market exchange wagers, defined as agreements, contracts, transactions, or swaps offered or executed on a prediction market tied to a sporting contest or event. The tax is structured on a tiered basis, with a rate of 1.75% applied to the first 5 million exchange wagers during a fiscal year and 3.5% applied to each additional wager thereafter.

Lawmakers also relied on fund sweeps totaling approximately $185 million to support the budget, including a $150 million transfer from the Road Fund to the General Revenue Fund and a $35 million transfer from the State Coronavirus Urgent Remediation Emergency Fund.

Additional changes include modifications to the tobacco products tax structure, shifting the tax base from wholesale price to the actual cost paid by distributors or remote sellers beginning January 1, 2027. The legislation also extends tax obligations to certain remote retailers meeting specified sales thresholds and caps the per-cigar tax at $0.75 for a defined period. Lawmakers also approved an increase in the state’s tire fee, raising the tax by $0.50 per new or used tire sold and delivered in Illinois.

Health Care

Medicaid Omnibus

The General Assembly passed Senate Bill 3365, a broad Medicaid and health system reform bill focused on stabilizing providers, increasing targeted investments, and strengthening oversight. The bill establishes a Distressed Hospital Loan Program to provide interest‑free financial support to struggling hospitals while requiring structured repayment and enhanced financial accountability, and it expands state oversight of hospital finances through new reporting requirements. The Distressed Hospital Loan Program is capitalized through a one-time transfer of up to $85 million beginning January 1, 2027, from the Healthcare Provider Relief Fund. It also makes targeted investments in behavioral health services, including $10.6 million for Assertive Community Treatment and $17.5 million for Community Support Teams. Additionally, the bill restructures funding by dissolving the Medicaid Technical Assistance Center Fund and redirecting those resources into provider support, while modernizing Medicaid administration, including stronger provider oversight, data sharing, and claims systems. The bill also expands Medicaid coverage to include preeclampsia biomarker testing, improving early identification and management of high-risk pregnancies.

The legislation grants the Department of Healthcare and Family Services emergency rulemaking authority to implement federal Medicaid changes under Public Law 119‑21, allowing Illinois to rapidly conform its policies and regulations to new federal requirements. It clarifies that to the extent federal law or rules from the Centers for Medicare and Medicaid Services (CMS) exclude a group of non-citizens from Medicaid or federal funding, Illinois is not required to cover those populations using state-only dollars. The bill also requires the Department of Public Health, in coordination with other agencies and stakeholders, to produce a report evaluating and optimizing the State’s health care system and patient access to care, with recommendations to the General Assembly.

Patient Access to Pharmacy Protection Act

The General Assembly passed House Bill 2371, which addresses participation in the federal 340B drug discount program by prohibiting pharmaceutical manufacturers from restricting how hospitals, clinics, and other eligible providers access and distribute discounted medications, including through contract pharmacies. The bill includes a reporting requirement for 340B covered entities, including disclosure of prescription drug acquisition costs and aggregate payments received under the program. Additionally, the Department of Healthcare and Family Services is required to report on the program’s impact on the state Medicaid program.

340B Transparency, Reporting, and Accountability Act

In conjunction with HB 2371, the legislature passed House Bill 4327 which requires the Illinois Department of Insurance to conduct a comprehensive study of how 340B-covered entities in Illinois participate in the program and use associated revenue. This study will evaluate the impact of the 340B program on patient care and broader health system outcomes. The Department of Insurance must submit a report of its findings by July 1, 2028.

Energy

Energy Trailer Bill

The General Assembly approved House Bill 1700, an energy trailer bill that serves as follow-up legislation to the Clean and Reliable Grid Affordability Act, which was passed during the 2025 veto session. The measure includes provisions granting the Illinois Commerce Commission authority to intervene in siting decisions when renewable energy developers and local governments are unable to reach an agreement. The bill also makes a series of technical and administrative updates related to the implementation of the underlying energy law.

Data Center Regulation (POWER Act)

Lawmakers considered, but did not advance, the Protecting Our Water, Energy, and Ratepayers (POWER) Act (SB 4016/HB 5513), a comprehensive proposal aimed at regulating large-scale data centers. The legislation, backed by environmental and consumer protection groups, sought to establish requirements related to water usage transparency, renewable energy procurement, and agreements between developers and local governments. Notably, the proposal did not receive a floor vote in either chamber before adjournment. However, lawmakers have indicated that negotiations are expected to continue throughout the summer.

The bill would have required data center developers to disclose the environmental impacts of their projects, including energy and water use, and to procure renewable energy to power operations. It also sought to ensure that developers bear the costs associated with the infrastructure needed to support their energy demands, rather than shifting those costs to ratepayers. Additional provisions would have prohibited certain nondisclosure agreements, established industry-funded oversight mechanisms, and increased transparency around energy and water consumption.

Cannabis & Hemp Omnibus

The General Assembly passed Senate Bill 3222, a comprehensive measure making changes to Illinois’ cannabis and hemp laws. The legislation establishes a regulatory framework for hemp-derived cannabinoid products and creates a pathway for existing hemp businesses to continue operating under the new rules and transition into Illinois’ regulated cannabis market. The legislation also aligns state hemp regulations with forthcoming federal requirements.

Under the framework, hemp derived cannabinoid products are capped at 0.4 milligrams of THC per container, and only topical and consumable products are permitted, with smokable and inhalable products prohibited.

Senate Bill 3222 includes several provisions intended to support smaller operators and advance equity goals. The measure waives license renewal fees for businesses earning less than $50,000 annually and reduces fees by 50% for those earning up to $750,000. It also requires that 50% of all cannabis transport be conducted by Social Equity Transporters and reserves at least 45 infuser licenses for social equity applicants.

On the criminal justice side, the bill doubles cannabis possession limits for both Illinois residents and non-residents. Illinois residents may now possess up to 60 grams of cannabis flower, 10 grams of cannabis concentrate, and infused products containing up to 1,000 milligrams of THC, with non-resident limits also increased. The bill also expands eligibility for automatic expungement by increasing the threshold for a qualifying minor cannabis offense from 30 grams to 60 grams, broadening eligibility for individuals impacted by prior enforcement.

The bill allows adult-use cannabis licensees to obtain medical cannabis licenses, expanding patient access to cannabis products without certain taxes. Additional provisions permit drive-through and curbside pickup cannabis sales and expand production capacity for craft growers by increasing allowable canopy size from 5,000 square feet to 14,000 square feet.

Housing

Governor Pritzker proposed the Building Up Illinois Developments (BUILD) Initiative to increase housing supply and affordability by reducing barriers tied to local zoning and permitting processes. Many local government groups, including the Illinois Municipal League, opposed several proposals, arguing they would limit local control over zoning decisions. Local officials maintained that housing needs and infrastructure capacity vary across communities and are best addressed at the local level. Lawmakers did not advance the BUILD Plan before adjournment

The initiative included a range of proposals addressing permitting timelines, zoning requirements, and development costs. These included measures to expedite permit approvals through third-party review (Senate Bill 4063), eliminate certain parking mandates (Senate Bill 4064), allow denser residential development (Senate Bill 4060), permit residential buildings up to six stories with a single exit stairway (Senate Bill 4061), require municipalities to allow accessory dwelling units (Senate Bill 4071), and standardize impact fee formulas (Senate Bill 4062).

In the final week of session, Democrats introduced a separate package of housing bills reflecting similar priorities. Senate Bill 640 would have required local governments to allow “middle housing,” such as duplexes and triplexes, in single-family zoning districts, while Senate Bill 643 proposed establishing uniform standards for permit review and inspections. However, key elements of the BUILD Initiative, such as statewide legalization of accessory dwelling units and standardized impact fees, were not included in the Senate package. Additional bills in the package did not advance including Senate Bill 635, aimed at facilitating faith-based housing development, as well as Senate Bills 608, 330, 332, and 329.

Education

Mandated Wireless Communication Device Policy

After failing to advance in the prior session, Illinois lawmakers gave final approval to Senate Bill 2427, a measure prohibiting student cellphone use during the school day at most public and charter schools. The policy was a priority of Governor Pritzker and advanced after being a focus across the past two legislative sessions.

Beginning in the 2027-2028 school year, school boards across the state without an existing policy will be required to implement a wireless communication device policy. For elementary and middle school students, the legislation effectively establishes a “bell-to-bell” ban on cellphone use during the instructional day. High school students may be permitted to use devices during lunch or other breaks at the discretion of individual school districts, and schools may allow device use for educational purposes or in emergency situations. The bill also establishes restrictions on how schools can enforce the policy, prohibiting the use of fees, fines, suspensions, and expulsions.

Alyssa’s Law

The legislature unanimously passed House Bill 5107, also known as Alyssa’s Law, which enables the use of mobile panic alert systems in Illinois schools. Under the legislation, school districts and private schools must consider the use of mobile panic alert systems when developing or updating their school emergency and crisis response plans by the 2028–2029 school year.

The law is named in honor of Alyssa Alhadeff, a 14-year-old student who was killed in the 2018 mass shooting at Marjory Stoneman Douglas High School in Parkland, Florida. Her family, along with the organization Make Our Schools Safe, has advocated for the adoption of these systems to ensure first responders can be notified and dispatched immediately during an emergency.

In-State Tuition Expansion

Lawmakers approved House Bill 5093, which expands eligibility for in-state tuition at Illinois public colleges and universities by modifying existing residency requirements. The legislation allows students who attended an Illinois high school for at least three years to qualify for in-state tuition, even if they established residency outside the state prior to enrolling. In addition, the bill removes a prior requirement that certain students must have attended an Illinois high school or community college while residing in the state.

Chicago Bears

Legislation aimed at keeping the Chicago Bears in Illinois did not pass the General Assembly despite a late-session push in the final hours of session. The Senate approved a revised proposal (HB 958) by a 37-17 bipartisan vote around 3:30 a.m., but the House adjourned without taking up the measure. The proposal would have allowed municipalities, specifically those in Cook County with populations over 70,000, to establish local stadium authorities to own and finance a new stadium, with the Bears funding construction while the publicly owned facility would be exempt from property taxes. The legislation also would have authorized these authorities to issue revenue bonds backed by a mix of local tax revenue, public funding, and private contributions, and would have allowed the surrounding stadium district to qualify for a STAR bond designation, enabling project costs to be reimbursed through future state sales tax revenues generated by the development.

Artificial Intelligence

Artificial intelligence regulation emerged as a prominent theme this session, with lawmakers advancing a package of AI-related measures aimed at increasing transparency, accountability, and oversight. In total, five AI-focused bills were approved by the General Assembly.

Artificial Intelligence Safety Measures Act

Senate Bill 315 establishes safety, transparency, and oversight requirements for developers of advanced AI systems, particularly large or “frontier” models. The legislation requires companies to implement risk-management frameworks, conduct catastrophic-risk assessments, report critical safety incidents, and publish transparency frameworks explaining how they evaluate model capabilities and address potential risks. To ensure compliance, the bill mandates annual independent third-party audits and requires developers to retain external auditors to assess adherence to these standards. It also includes whistleblower protections for employees who report safety concerns or violations.

Prohibition on Bots Purchasing Tickets Act

Senate Bill 318 unanimously passed both chambers and prohibits the use of bots and other automated systems to purchase event tickets in excess of posted limits. The legislation also bars individuals from using artificial intelligence tools, multiple accounts, Internet protocol (IP) addresses, or email addresses to circumvent ticket sale restrictions, including electronic queues, waiting periods, presale codes, and other sales controls. The bill further prohibits ticket resellers from making false or misleading representations suggesting affiliation with or endorsement by an artist, team, venue, or event organizer. Violations are subject to civil penalties of up to $2,000 per infraction, and ticket issuers or venue operators are required to disclose the number of tickets withheld from public sale and report violations to the Illinois Attorney General.

Prohibition on Rent Control and Pricing Tools

Senate Bill 343amends the Illinois Antitrust Act to prohibit landlords, property owners, and other competitors from coordinating or fixing rental prices, fees, or lease terms for residential units. The measure specifically targets coordination facilitated through third-party services or software, including rent-setting algorithms used across competing properties. The bill makes it unlawful to engage in or facilitate price coordination, including through the use, sale, licensing, or provision of services or products—such as pricing software—that enable landlords to align rental terms. It also prohibits individuals or entities from using, subscribing to, or contracting with such services.

Prohibiting the Use of AI for Teacher Evaluations

Lawmakers unanimously passed Senate Bill 2909, which restricts the use of artificial intelligence in teacher evaluation processes. The legislation prohibits evaluators from using AI tools to assign numerical scores, generate qualitative ratings, or complete any evaluation task requiring professional judgment, including drafting teacher evaluations.

Restricting the Use of AI in Health Care Approvals

Senate Bill 3114 passed both chambers unanimously and limits the use of artificial intelligence in health care insurance decisions related to downcoding medical claims. The legislation prohibits payors from relying solely on automated systems to downgrade claims or bypass consideration of the full information submitted by providers. While insurers may use automated tools to flag claims for review, all downcoding determinations must be made or reviewed by a human. The bill also prohibits downcoding based solely on diagnosis codes, establishes safeguards against discriminatory practices targeting providers who treat complex or chronic conditions, and requires notice and a process for disputing downcoded claims.

Miscellaneous

Interchange Fee Prohibition Act

Having passed both chambers, Senate Bill 3645 delays the implementation of the Interchange Fee Prohibition Act to July 1, 2027. The law was first passed in 2024 and was originally scheduled to take effect on July 1, 2026, but lawmakers again delayed implementation by an additional year.

Rideshare Unionization

The General Assembly passed House Bill 5090, establishing a framework for rideshare drivers in Illinois to organize and collectively bargain with companies such as Uber and Lyft. The legislation outlines a process for forming a union, including requirements that a labor organization demonstrate an initial level of support and secure backing from at least 30% of drivers to be certified as a bargaining representative.

Property Tax Debt Sale Reform

The legislature passed House Bill 4537, which makes significant changes to how counties recover delinquent property taxes and brings Illinois into compliance with the 2023 U.S. Supreme Court decision Tyler v. Hennepin County by requiring that property owners receive any surplus equity remaining after a tax sale. The bill allows counties to acquire tax-delinquent properties without a judicial tax deed auction and resell them through public auctions, while establishing a surplus equity fund to compensate former property owners.

Children’s Social Media Safety Act

House Bill 5511, the Children’s Online Social Media Safety Act, passed both chambers as part of Governor Pritzker’s initiative to strengthen online protections for minors. Beginning in 2028, online platforms must verify a user’s age through a device-provided signal and apply enhanced privacy and safety protections to accounts identified as under 18.

These protections include limiting location-sharing, restricting notifications between 10 p.m. and 7 a.m., and reducing exposure to potentially harmful or addictive platform features. The bill also restricts how platforms curate content for minors by prohibiting the use of browsing history or device data to algorithmically determine feeds, limiting content to material users request, search for, follow, or receive directly.

Platforms must implement default privacy settings, limit certain transactions such as digital currency purchases, and adjust design features including profile visibility and content access. While minors may still use social media, age settings must guide how platforms tailor the user experience, with limited exemptions for parents, certain older teens, and news organizations.

Veto Session

The Illinois General Assembly has announced its schedule for the fall veto session. Lawmakers are scheduled to return to Springfield for two separate three-day sessions in November and December. The scheduled dates are as follows:

• Tuesday, November 17, 2026
• Wednesday, November 18, 2026
• Thursday, November 19, 2026
• Tuesday, December 1, 2026
• Wednesday, December 2, 2026
• Thursday, December 3, 2026

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