Illinois and many states are starting off the 2025 fiscal year with newly passed budgets in place and now new data shows where the funds that make up their budgets come from.
Pew Charitable Trusts has released a data set showing how taxes make up a state’s budget, including personal income taxes, general sales taxes and corporate taxes.
“Personal income taxes continue to represent the greatest portion of state budgets nationwide making up about a third of state revenue across the country at 33.1%,” said Page Forrest, senior associate with Pew’s Fiscal 50 team.
Illinois is slightly higher at 34.6%. Forrest said a state could run into trouble if there is an economic downturn and people start losing jobs.
“If a state is more dependent on personal income taxes as revenue, they might be more impacted if the state is in a recession scenario where people lose a lot of jobs,” said Forrest.
Illinois’s unemployment rate is 4.9%, tied for the third-worst in the country.
As companies flee Illinois for more tax-friendly states, Pew’s data shows the state could face budgetary pressures because of the reliance on corporate taxes. Illinois is ranked fifth in the country on the reliance on corporate taxes at 15.7%.
Over 53% of state revenue in Illinois comes from state taxes, while 36.3% comes from taxpayer money from the federal government.
Illinois has the second highest property taxes in the nation, and a study by Kiplinger found that Illinois is the third-worst least tax-friendly state in the country for middle-class families. Only New Jersey and Connecticut ranked worse.
“While Illinois is a state that doesn’t tax retirement income, you’re out of luck if you’re still working,” said Kiplinger’s report. “Average income taxes for the middle class reach nearly $5,000, and property bills in Prairie State are on the high end, too.”
Kiplinger reports 12.7% of Illinoisans’ income is spent on taxes.
