Holiday shoppers are eager to spend this year. Illinois is overly eager to tax them.
The 2025 holiday shopping season is expected to be strong, with 186.9 million people – 3 million more than last year’s record – planning to make purchases from Thanksgiving Day through Cyber Monday.
While this is great news for retailers and a good sign for the economy, Illinois shoppers will see their bills padded by the nation’s seventh-highest combined state and local sales tax averaging 8.92%. Some local governments hike the sales tax well above that rate.
Chicago shoppers see a 10.25% sales tax bumping up the checkout totals on all their purchases. Chicago’s sales tax is the second highest of any major city in the nation, but it will go even higher in the New Year: 10.5%, becoming the No. 1 sales tax in the nation as part of a transit bailout.
Illinois’ tax policies aren’t much better. They’re a drag on the state’s economy, as is shown by the state’s worsening tax competitiveness rating compared with other states. Illinois recently dropped six spots in the national rankings, losing out to 37 other states and putting in the worst performance of any state in the Midwest.
This kind of trajectory only discourages business formation and prompts families and businesses that are already here to consider leaving the state, maybe for shopping or maybe for good. Polls show voters are fed up and see high taxes as the top issue facing Illinois.
Illinois politicians keep overspending, claiming budget shortfalls and the need to raise taxes. Chicago’s new sales tax rate is the product of transit spending and shortfalls.
Politicians show little regard for the impact of these additional taxes on the state’s business climate and economic competitiveness. They should link government spending to economic growth, allowing the state’s small businesses to continue being the state’s jobs engine.
