Illinois hikes taxes for gas, Zyn and betting, bans hotel mini shampoos
Published in Business News
People looking to hit the road, bet on sports, book a stay through a short-term rental platform or buy a vape at their corner convenience store in Illinois will have to pay a little more to the state in taxes starting Tuesday.
While Gov. JB Pritzker earlier this year ruled out across-the-board sales tax increases or another attempt to tax higher earners to cope with a tough financial year, several more tightly focused revenue hikes were included in the $55 billion budget passed by legislators in May and set to take effect July 1.
As part of an annual increase tied to inflation, Illinois’ gas tax will increase by about 1 cent to just more than 48 cents per gallon. The tax on diesel fuel will also go up about 1 cent to just under 56 cents per gallon.
For sportsbooks, the state added a per-wager tax of 25 cents for the first 20 million bets placed each year, a levy that goes up to 50 cents for bets beyond that number. The betting tax is expected to bring in about $36 million.
FanDuel operator Flutter already said last month it would tack on a 50-cent fee for bets placed in Illinois in response.
Users of tobacco and nicotine products will also likely be paying more. Vaping products will be taxed at 45% of wholesale price, up from a rate of 15% set six years ago. Other tobacco products — excluding cigarettes — will also now be subject to the 45% tax, as will nontobacco nicotine products such as Zyn nicotine pouches.
Exactly how those costs will be passed on to consumers remains to be seen. However, it’s likely that a $20 disposable vape could cost close to $5 more once the 45% wholesale tax goes into effect, and that doesn’t factor in the resulting increase in the sales tax at the register, the Tribune previously reported. A can of Zyn pouches that might cost $4.50 now will likely go up to $6.50, said Taha Saleem, chief information officer for suburban wholesaler American Distributors.
The tobacco tax increases are expected to raise about $50 million. Most of that will go to cover Medicaid costs, with $5 million set aside for tobacco cessation programs.
Also new: Short-term vacation rental platforms will be subject to the state hotel operators tax, which is levied on businesses that rent rooms for fewer than 30 days. Airbnb’s website indicates it already accounts for this tax but the change could affect rentals on other platforms.
The new taxes are set to fund a budget that includes additional spending on K-12 education, grants to lower-income college students and a fund to start addressing anticipated pension shortfalls, along with the rest of the state’s operations.
Apart from the tax increases, several other changes to state law are set to take effect Tuesday.
Visitors to larger Illinois hotels will no longer find mini shampoo, conditioner and lotion bottles on their counters due to a new state ban on single-use bottles for personal care products. Hotels with fewer than 50 rooms can keep offering the bottles for an additional year until the law goes into effect for them in July 2026.
The state will also no longer suspend the driver’s licenses of motorists who fail to appear in court for minor traffic offenses that don’t result in jail time, like driving without a valid license or driving uninsured. Failure to appear for traffic violations that could result in a jail sentence, like driving under the influence and reckless driving, or violations that involved a death could still result in a license suspension.
In Chicago, the minimum wage at most employers will increase to $16.60 per hour, up from $16.20 this year. The tipped wage will also increase to $12.62.
Another law that would have wide-ranging impact is on hold. A ban on certain credit card fees that has drawn a legal challenge from financial institutions was initially set to start Tuesday but lawmakers this spring voted to push back the effective date by a year to let the legal process play out.
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