New Illinois Laws in Effect July 1, 2025

Illinois’ new budget took effect at the start of Fiscal Year 2026, which fell on Tuesday July 1, 2025. Along with the new budget also comes new law and tax changes.

The gas tax is set to increase by a rate of 1.3 cents per gallon, raising the tax to $0.483 per gallon. Tax on diesel fuel is set to increase to $0.558 per gallon. Each summer, the state’s gas tax goes up using the Consumer Price Index, a measure of inflation’s impact on the price of goods in the U.S. economy. The number of the proposed increase is then included in the state’s budget proposal. When combining the new state gas tax, the sales tax on fuel, and extra local gas taxes that cities or counties may add, the total amount of taxes paid is about $0.665, making it the second highest in the country.

Illinois’ minimum wage went up to $15 per hour on January 1, 2025, but Chicago’s minimum wage goes into effect on July 1 each year. A city ordinance requires the minimum wage to increase annually according to the Consumer Price Index or at a rate of 2.5%, whichever is lower. This year, the wage is increasing from $16.20 to $16.60, and from $11.02 to $12.62 for tipped employees.

Illinois hotels with 50 or more rooms will be prohibited from providing guests with small single-use plastic bottles with products like shampoo and body wash. All other hotels will have the same requirement imposed on them on January 1, 2026. This new law is a part of the state’s “Small Single-Use Plastic Bottle Act,” aiming to help protect the environment.

The state is also imposing a tax of $0.25 per sports wager placed. Once 20 million wagers have been placed, that tax will increase to $0.50 per wager.

Additionally, short-term rental property sites like Airbnb will be subject to the Hotel Operators’ Occupation Tax. According to the Illinois Department of Revenue, this tax is at a rate of 6% but will only be applied to 94% of the total rental price. Short-term rental property owners are expected to pay this tax but can choose to pass it on to their tenants.

Tobacco products will now be taxed at a rate of 45% of their wholesale price, which is up from the previous rate of 15%. This includes products like vaping pens and nicotine gum. This increase is expected to generate about $30 million in revenue for the state.

If you have questions about Illinois’ new laws or their implications, contact the qualified attorneys at Rock Fusco & Connelly, LLC.