A provision in the Fiscal Year 2025 budget proposed by Illinois Gov. J.B. Pritzker could result in a higher tax bill for most of the state’s residents.
According to the text of the budget, Pritzker is proposing that the state increase its exemption allowance to $2,550 for Tax Year 2024.
Since that increase is less than what was originally called for due to inflation, the action would result in deposits of an estimated $93 million into the state’s general fund, according to the budget.
The “exemption allowance” is a standard deduction for Illinois taxpayers that is designed to reduce adjusted gross income, according to state officials.
The deduction for tax year 2023 clocked in at $2,425, according to the state’s Department of Revenue. That number was lower than the $2,625 that it was originally supposed to be, with the number determined by fluctuations in the Consumer Price Index, which measures inflation.
State officials had paused that automatic inflation-tied increase, but were going to allow it to resume in 2024, which would have increased the exemption to $2,775.
Instead, Pritzker’s plan would mean that the exemption would be $225 smaller than originally intended, which could result in a small increase in tax bills for state residents because of increases to their taxable income.