Illinois Gov. J.B. Pritzker unveiled his fiscal year 2025 budget proposal on Wednesday, pledging that the state will continue to grow social programs while retaining a balanced budget, NBC Chicago’s Mary Ann Ahern reports.
A provision in the Fiscal Year 2025 budget proposed by Illinois Gov. J.B. Pritzker could result in a higher tax bill for most of the state’s residents.
According to the text of the budget, Pritzker is proposing that the state increase its exemption allowance to $2,550 for Tax Year 2024.
Since that increase is less than what was originally called for due to inflation, the action would result in deposits of an estimated $93 million into the state’s general fund, according to the budget.
The “exemption allowance” is a standard deduction for Illinois taxpayers that is designed to reduce adjusted gross income, according to state officials.
The deduction for tax year 2023 clocked in at $2,425, according to the state’s Department of Revenue. That number was lower than the $2,625 that it was originally supposed to be, with the number determined by fluctuations in the Consumer Price Index, which measures inflation.
State officials had paused that automatic inflation-tied increase, but were going to allow it to resume in 2024, which would have increased the exemption to $2,775.
Instead, Pritzker’s plan would mean that the exemption would be $225 smaller than originally intended, which could result in a small increase in tax bills for state residents because of increases to their taxable income.
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State Republicans have blasted the move, arguing that it unfairly targets low and middle-income residents.
“This is going to hit low-income and middle-income families, and it is a tax increase,” Senate Minority Leader John Curran told WBEZ. “If the legislature does not go along with this, people will get a greater tax savings with the current existing law than what the governor has proposed.”
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WBEZ reported that the originally scheduled increase to the standard exemption would have saved families an estimated $69.
Unlike the federal tax code, which uses a progressive system to determine the rate at which income is taxed, Illinois’ state income tax is a flat 4.95% across the board. There are ways to reduced taxable income at the state level, including an Earned Income Tax Credit and other methods.
Taxpayers who earn more than $64,000 are not eligible for that EITC, while taxpayers who earn more than $250,000 are not eligible for the exemption allowance.
