Changes are happening for Illinois citizens regarding their state tax credits. The new state budget allows families of four to gain extra $69 in tax refunds next year due to a rise in the standard exemption. This common tax credit used by many Illinois residents will be linked with inflation again, overturning a decision made last year.

Standard Exemption Brought Back

The standard exemption started first by Ex Democrat Gov. Pat Quinn had been rising every year to correspond with inflation since 2011. But, earlier this year, officials separated it from inflation following one of the largest consumer price index hikes in years brought on by supply chain problems related to the COVID19 pandemic. The new state budget which is waiting for Gov. J.B. Pritzker’s approval brings back this inflation adjustment.

Balanced State Budget, Positive and Negative Aspects

It appears that Illinois officials have passed another balanced budget under Gov. J.B Pritzker’s regime for the sixth time running. This protection helps keep the state’s credit rating safe and preserves relative financial equilibrium consistent post the tumultuous times of Gov. Bruce Rauner and Speaker Mike Madigan political feuds.

Budget Philosophy

The thought process demonstrated towards making this budget seems to be spending available money now without thinking about future financial hurdles, resulting in criticisms for irresponsible behavior from leaders since it looks similar to how some teenagers handle money.

New Revenue Sources to Stabilize Income Taxes

To maintain stable income taxes for individuals, Pritzker and fellow Democrats turned towards several means of raising revenue which include,

• Decreasing businesses’ ability to write off their net operating losses from the pandemic era rapidly.
• Significantly higher taxes on sports betting companies.
• Putting a limit on the remittance retailers receive for collecting and submitting sales taxes.
• A new tax applied on firms that reserve and re-rent sections of hotel rooms.

Fear About Future Budgets

Certain Democrats start to panic at the expenditure levels. Some suggest that next year’s budget will feature another revenue shortfall surprisingly without even considering significant funding needs such as the $700 million plus funding requirement for Chicago public transit organizations. Admittedly taxpayers are the only available source to bridge this gap.

Election Year Effects

This year being an election year for state officials, maybe an explanation for some budget decisions. Residents should be careful about potential tax rises next year since it is not an election year.

Tax Load and Business Environment in Illinois

The tax burden in Illinois, listed as one of the highest in the nation including local and state taxes, poses a significant problem. The business environment, especially in Chicago, depends highly on these income stresses. Laying down conditions for business expansion and population growth to raise tax revenues organically is crucial but challenging due to progressive tax and spend policies prevalent in Chicago currently.

Perspective of Illinois Chamber of Commerce President

Lou Sandoval echoed Crespo’s remarks criticizing Pritzker’s squad for excluding core groups from budget discussions. He feels worried that Pritzker’s government might land up in a future where rises in taxes are inevitable which Pritzker however dismisses stating similar warnings had been issued before without any serious fallout.

Planning For Upcoming Budgets

The present budget trends were quite clear earlier and should have been prepared accordingly. A major part of the financial issues Illinois is facing comes from the completion of onetime federal contributions related to the pandemic era. These funds had resulted in setting up of programs that now need ongoing financing from ordinary state incomes.

Final Words

Illinois people can look forward to some relief with more tax credit next year, but broader financial issues need careful planning, responsible budgeting for long-term stability without overtaxing the citizens.