The Pritzker tax increases signed into Illinois law for 2025 target sports betting operators, tobacco distributors, video gaming terminals, and large corporations, and they cap a long-standing sales tax discount for high-volume retailers. The individual income tax rate does not change. Most of the new revenue comes from specific industries, but some of it reaches consumers through higher shelf prices and tighter promotions.
A New Per-Wager Tax on Online Sports Bets
Starting July 1, 2025, Illinois charges a per-wager privilege tax on every individual bet placed online or through a mobile app with a master sports licensee. It sits on top of any other fees or taxes the Sports Wagering Act already requires.
The rate runs on a two-tier schedule tied to the state fiscal year (July 1 through June 30):
- $0.25 per wager on the first 20 million annual combined Tier 1 and Tier 2 wagers placed with a licensee.
- $0.50 per wager on every wager above that 20-million threshold.
“Annual combined Tier 1 and Tier 2 wagers” counts every individual bet placed with a licensee during the fiscal year, regardless of outcome or payout. Tax liabilities began accruing on July 1, 2025, and operators owed their first remittance to the Illinois Gaming Board no later than August 31, 2025.1Illinois Gaming Board. FAQs on New Statutory Sports Wager Tax Operators that miss remittance schedules face administrative fines or license suspension.
If you place bets in Illinois, you won’t see this tax as a line item. You may see it in the form of worse odds, fewer promotional offers, or changed bonus structures as platforms absorb the cost.
Tobacco Wholesale Tax Up to 45 Percent
Illinois raised the wholesale tax on tobacco products from 36 percent to 45 percent, effective July 1, 2025. The previous 36 percent rate had been in place since 2012. The new rate applies to the wholesale price of tobacco products, including moist snuff and electronic cigarettes, sold or distributed to retailers or consumers in Illinois.2Illinois General Assembly. Illinois Code 35 ILCS 143/10-10 – Tax Imposed
Because the tax is collected from distributors before product reaches store shelves, you see the increase in higher retail prices rather than a separate charge at checkout. On a box of cigars with a $20 wholesale price, the state tax rose from $7.20 to $9.00.
Video Gaming Terminal Tax Up One Point
Under the Video Gaming Act, the state tax rate on net terminal income rose from 34 percent to 35 percent. Net terminal income is what’s left after player prizes are paid out, and the additional revenue is directed to the General Revenue Fund.
One percentage point is small per terminal but adds up across the thousands of licensed machines in Illinois bars, restaurants, truck stops, and fraternal organizations. Terminal operators and the businesses hosting them typically split revenue by contract, so both sides may revisit those terms.
Corporate Net Operating Loss Deduction Capped at $500,000
Large corporations doing business in Illinois remain limited in how much of their past losses they can use to offset current taxable income. For any tax year ending on or after December 31, 2024 and before December 31, 2027, a corporate net operating loss (NOL) carryover deduction may not exceed $500,000.3Illinois General Assembly. Illinois Code 35 ILCS 5/207 – Net Losses
The cap in effect for tax years ending between December 31, 2021 and December 31, 2024 was $100,000, so the new window actually loosens the limit by a factor of five. Unused losses above the cap carry forward to future years rather than disappearing.3Illinois General Assembly. Illinois Code 35 ILCS 5/207 – Net Losses
In practice, a corporation holding $10 million in accumulated losses can offset only $500,000 of this year’s Illinois income with them. The remaining $9.5 million stays available for later years. The rule guarantees Illinois a minimum level of corporate tax from profitable companies that would otherwise pay nothing by applying historical losses.
Retailers’ Sales Tax Discount Capped at $1,000 Per Month
Retailers who collect Illinois sales tax keep 1.75 percent of what they remit as compensation for the administrative work of filing. Starting January 1, 2025, that discount is capped at $1,000 per month.4Illinois Department of Revenue. As a Retailer, Am I Allowed a Discount From the Sales Tax I Report on My Form ST-1
If you collect roughly $57,000 or less in monthly sales tax, 1.75 percent of that comes in below the $1,000 ceiling, so nothing changes for you. The cap bites on high-volume retailers. A store collecting $200,000 in monthly sales tax previously kept $3,500; now it keeps $1,000 and remits the other $2,500. Retailers above the threshold now absorb compliance costs the discount used to cover.
What Didn’t Change
The Illinois individual income tax rate stays at 4.95 percent. None of the 2025 measures raise it. The changes are concentrated on specific industries and on larger businesses, with consumer exposure limited to the price effects of the tobacco, sports betting, and video gaming taxes.