2024’s highs, lows for Illinois businesses; getting more highs in 2025
Illinois businesses have had a scary time this year. They were too often the butt of the joke for policymakers.
In 2025, Illinois lawmakers must prioritize improving the business environment to foster growth and stability. Anything else will hurt our job creators, which hurts us all.
Here’s what happened to businesses in 2024.
Economic challenges
Several notable businesses suffered closures and layoffs. TrueValue filed for bankruptcy, Amazon closed a facility, a PepsiCo plant shut down without warning and Ravinia Brewery was forced to close. There also was Foxtrot’s shuttering and John Deere’s reduction of 600 jobs, among other low points for businesses this year.
Altogether, the number of businesses operating in Chicago fell to 29,425, with only 22,558 businesses renewing their licenses in the state’s biggest city. That’s the lowest number in a decade, with the city losing 20% of businesses since 2014.
Broad economic uncertainty coupled with overregulation and high operating costs make it challenging to run a business in this state. This all comes as Illinois is poised to increase the state minimum wage to $15 per hour in 2025, further pressuring job creators.
High expenses and hostile taxes already make it hard to hire and to find a job in the state with the nation’s third-highest unemployment rate of 5.3%. Add in the highest sales tax in the Midwest and the second-highest corporate income tax rate in the country at 9.5%, and things get even harder.
Still, Gov. JB Pritzker hiked taxes by $1.1 billion on, among other things, sports betting, managed care, video gambling and extending the cap on net operating losses earlier this year — further burdening businesses and their customers. When state lawmakers plan for their fiscal year 2026 budget, they must stop spending more than they have and asking businesses to cover the deficit.
Reasons for optimism
Despite these challenges, Illinois businesses have shown resilience. New business applications have grown by 47% since the pandemic, reflecting an entrepreneurial spirit. Small businesses in particular have helped lead the way in hiring, creating nearly 31,000 jobs in 2023. These businesses also have seen above-average wage growth, underscoring their vital role in the local economy. And they’ve been rewarded for it; small businesses, such as Blacksheep in Glencoe, reported their best holiday season to date.
New industries are emerging as well, particularly in the computing sector. Illinois secured new data centers in Aurora and Grayslake and began developing a new quantum computing campus. Expanding these emerging businesses will create new manufacturing and tech jobs.
In a significant win for the business community, Chicago residents rejected a “mansion tax” in March that would have disproportionately hurt more than 5,100 businesses. When Illinois voters are given the opportunity to vote on binding tax hikes, they reject them.
The way forward
It is crucial for lawmakers to prioritize improving the business environment in the new year. Both Pritzker and Chicago Mayor Brandon Johnson should stop forcing businesses to pick up the tab for their growing budgets and instead prioritize fiscal reform and reduced spending.
At the root of all the state’s problems is the pension crisis, which drives up taxes on businesses and residents. As mandatory pension payments grow, they crowd out other needs and force lawmakers to hike taxes or cut services. When lawmakers consider tweaks to pensions, such as Tier 2, it’s essential they avoid adding unknown, growing costs that ultimately will be passed on to Illinois’ businesses and residents. More than ever, the state needs constitutional pension reform.
In the new year, Illinois leaders must take decisive action to support businesses, promote economic growth, and create an environment where all Illinoisans can thrive.
• Matt Paprocki is the president and CEO of the Illinois Policy Institute.