Illinois voters soundly rejected a progressive state income tax because it was a path to tax retirees. That isn’t stopping state lawmakers from trying again.
Lawmakers introduced a new bill to end Illinois’ long-standing flat income tax and replace it with a progressive structure – a move that could impose taxes on retirees and others.
The move comes as Illinois tax revenues have reached record highs. Illinoisans face some of the nation’s biggest tax burdens.
This isn’t even the legislature’s first progressive tax attempt this year. And for a second time, former Illinois Gov. Pat Quinn is pushing the idea.
Voters statewide rejected a progressive tax because it hands state lawmakers power to set tax rates at whatever they want on whomever they want, including on retirees who are not taxed by the state on their retirement income. Calls for taxing “millionaires” are deceptive bids to go after the income brackets of family farms and small businesses – not penthouse residents.
Plus, after state lawmakers have the power to tax one income group, nothing stops them from adding another, and another, and another. Dividing and conquering avoids the political backlash of raising everyone’s flat tax.
Record revenues driven by tax hikes, not growth
Illinois has collected $54 billion in 2025, marking an 35% increase since 2020. The surge didn’t come from economic growth, but rather from at least 50 tax hikes imposed during Gov. J.B. Pritzker’s administration.
Despite record revenues, Illinois has had among the slowest economic growth in the nation. Since Pritzker’s first term, the state has ranked 45th nationally in economic growth and dead last in the Midwest. High taxes have been a primary driver of stagnation, through discouragement of investment, loss of population and lack of entrepreneurship.
Despite this, lawmakers keep looking towards progressive tax schemes to give themselves more to spend.
Progressive taxes have already failed, for good reason
This isn’t the first attempt to impose progressive income taxes. In 2020, a constitutional amendment was put to a statewide vote, but the proposal failed when 55% of voters rejected it. Their reasons remain just as valid today.
State Treasurer Michael Frerichs in 2020 admitted the progressive tax was a path to start taxing the state’s retirees. At the time, all 32 states with a progressive tax were taxing their retirees’ income from 401(k)s, IRAs, Social Security and pensions.
While their talking points claim “millionaires” will pay the tax, they ignore that the wealthy are highly mobile and the million-dollar incomes are often the less-mobile family farms and small businesses, which create the bulk of Illinois’ jobs. When Pritzker pushed his progressive tax in 2020, over 100,000 small businesses faced a 47% tax hike.
Flat income taxes offer simplicity, predictability and transparency. They make estimation of future tax liability easier for taxpayers, leading to improved economic decision making. Because everyone is taxed the same, politicians are less likely to raise rates because all voters will hold them responsible.
The flat income tax is one of the few saving graces helping Illinois remain moderately competitive. By any other measure, Illinois’ tax burden ranks among the worst:
- Flat income tax rate: 4.95% ranks 13th best in the nation, according to the Tax Foundation.
- Corporate income tax rate: 9.5%, the third-highest rate in the nation.
- State sales tax rate: 6.25%, but local rates can hit 10.5% as Chicago is about to see.
- Gasoline taxes: No. 2 in the nation at 84 cents per gallon.
- Effective property tax rate: 1.83% of a home’s value per year, highest in the U.S.
High taxes are the No. 1 issue facing the state, according to recent polls. They are a primary reason the state has lost 420,678 residents since 2020, further hampering the state’s economic growth prospects.
If lawmakers are serious about protecting Illinois’ economic future, they should swiftly reject any renewed push for a progressive income tax. They should use the flat tax and lack of retiree tax as selling points for the state.
And they should attack the real problem with Illinois state finances: runaway spending.
