Lawmakers plan to stop the automatic gas tax increase for a year but plan to use an unexpected $150 million in sales tax from high gas prices to balance the budget rather than benefit taxpayers.
Illinois lawmakers will say they gave drivers a break, but the planned suspension of an increase in the gas tax is far outweighed by a plan to use $150 million in additional sales tax revenue from high gas prices to cover the state’s budget shortfall.
The state gas tax was slated to go up to 49.6 cents from 48.3 cents July 1 because of an automatic inflation-linked increase, but the proposed revenue bill for fiscal 2027 would suspend that 1.3-cents-a-gallon increase for a year.
Thanks to a 6.25% sales tax and some tricky maneuvering, lawmakers have more than canceled out taxpayer savings in the proposed revenue bill for fiscal 2027. Instead of using the $150 million sales tax windfall to benefit taxpayers, perhaps by suspending the state gas tax altogether, Springfield plans to use it to help finance the budget.
Illinois is one of only five states with a general sales tax on gas.
The Illinois Constitution’s “lockbox” amendment arguably requires that sales tax money go to transportation-related spending. Lawmakers ignored the plain text of the amendment in recent years in favor of an interpretation that lets them direct those funds wherever they like – they plan to do that again this year.
In January, the average federal and state tax on gas in Illinois was just under 85 cents a gallon, according to the U.S. Energy Information Administration.
That’s the second-highest in the country, behind only California.
The high Illinois state tax is relatively recent. For almost three decades, from 1990 to 2019, the Illinois gas tax held steady at 19 cents a gallon. In 2019 Gov. J.B. Pritzker’s Rebuild Illinois infrastructure program doubled the state tax to 38 cents a gallon and provided the automatic July 1 increases.
Add to that the federal tax of 18.4 cents a gallon — which has not changed since 1993.
Lawmakers are likely to talk up the tax hike suspension as a win for taxpayers, but did they really do much for them at all?
