New Illinois Laws and Tax Changes Take Effect July 1, 2025
A new wave of laws and tax changes will take effect in Illinois starting July 1, 2025, following legislation passed during the 2024 and 2025 sessions and signed by the Governor. While many new measures—including the statewide minimum wage increase—were implemented earlier in the year, several notable updates are still set to roll out mid-year. Here’s a breakdown of what’s changing:
Motor Fuel Tax Increase
To keep pace with inflation, Illinois will increase its Motor Fuel Tax. The gas tax will rise from 45 cents to 48.3 cents per gallon, while diesel will increase from 54 to 55 cents per gallon. Illinois already has the second-highest gas tax in the nation.
Ban on Single-Use Plastic Bottles in Hotels
Under Senate Bill 2960, hotels with 50 or more rooms will no longer be allowed to provide small, single-use plastic bottles (under 6 ounces) of shampoo, conditioner, or soap. This change, aimed at reducing plastic waste, takes effect July 1. Smaller hotels have until January 1, 2026, to comply.
New Sales Tax Rules for Leases and Rentals
House Bill 4951 changes how sales tax is applied to leased or rented property (excluding motor vehicles, watercraft, aircraft, and semi-trailers). Starting July 1, lessors can use a resale exemption to buy property tax-free, then charge sales tax on lease or rental payments. The update also affects leases of certain computer software.
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Tobacco and Nicotine Product Tax Increase
Starting July 1, the tax on tobacco products will increase from 36% to 45% of the wholesale price. This includes items such as vaping pens and nicotine gum, which will also be taxed at the new rate under the state’s FY2026 budget plan.
New Sports Betting Wager Tax
A change to House Bill 1928, included in the Fiscal Year 2026 budget, introduces a per-wager tax on sports betting. Beginning July 1: A 25-cent tax will apply to the first 20 million bets placed with licensed sportsbooks. After that, the rate increases to 50 cents per wager. The state expects to generate $36 million in annual revenue from this measure.
Opioid Overdose Reversal Training for State Employees
Starting July 1, House Bill 5028 will require Illinois to train state employees to administer opioid antagonists like Narcan (naloxone). The goal is to equip staff to respond quickly in overdose emergencies.
Local Sales Tax Hikes in Dozens of Communities
The Illinois Department of Revenue has announced that at least 50 municipalities will see local sales tax increases ranging from 0.25% to 2%.
