Illinois to Raise Gas Taxes, Minimum Wage on July 1

Starting July 1, Illinois residents will encounter a fresh wave of tax increases affecting
everything from gas prices to digital services. The state’s total fuel tax burden could climb as
high as 85 cents per gallon when combining federal, state, and local rates. In Chicago, drivers
face an additional 8-cent city tax and a 3-cent Cook County tax, in addition to applicable sales
taxes.

Bryce Hill, a representative of the Illinois Policy Institute, criticized the automatic nature of the
annual increases. “With a record 3.86 million Illinoisans expected to hit the roads this summer,
another gas hike is painful, especially considering this increase happens automatically every year
without lawmakers even voting on it,” Hill said.

Chicago’s minimum wage will also rise, increasing to $16.60 per hour for most employees and
$12.62 for tipped workers. Hill warned that such policies could hurt workers and small
businesses alike. “We’re hurting our workers, especially on top of all the other taxes and fees the
state imposes, making Illinois more and more expensive for working families,” he said. “By
eliminating the tip credit, lawmakers are forcing businesses to make impossible choices: raise
prices, cut hours, or close entirely.”

Additional tax changes include a new 25-cent tax on the first 20 million sports wagers made in
Illinois, followed by a 50-cent tax on all additional wagers. Major platforms like FanDuel,
DraftKings, BetMGM, and Caesar’s are expected to be most affected.

Short-term rentals through services like Airbnb and Vrbo will face a new 6% state tax.
Meanwhile, the wholesale tax on tobacco products—including vapes and nicotine pouches—will
increase from 36% to 45%. Telecommunications services such as phone and internet will also
see a tax hike, rising from 7% to 8.65%.

For more details on the gas tax increase and other changes, residents can visit
illin.is/independencegas.