How our state stacks up: New report shows how Illinois compares to others on taxes, spending, other metrics
A new report from the state legislature’s Commission on Government Forecasting and Accountability shows how Illinois stacks up against the other 49 states in terms of taxes, spending, employment and other key financial metrics.
The information culled from U.S. Census Bureau and U.S. Bureau of Labor Statistics data shows how Illinois compares nationally on state-revenue related topics and also highlights Illinois’ performance among eight Midwestern states.
Additionally, it provides historical context for the state’s ranking over the previous eight years in most cases.
The 70-page report shows Illinois ranked fourth in terms of total tax dollars collected with $63 billion in tax revenue in 2023. However, Illinois ranked 13th in per capita tax collections, at $5,019 per person.
“When observing revenue-related rankings on a per capita basis, some believe that if a state is able to operate on tax rates that create relatively low per capita figures, the better the financial situation for the people of that state,” the report notes. “Others, however, would view low per capita figures as missed opportunities for revenue growth, and subsequent program spending.”
California was first among the states in total taxes collected with $220.6 billion, while North Dakota collected the most per person at $7,716.
“Due to its large population size, Illinois ranks high in most areas on a total dollar basis,” the report says.
Illinois is now the sixth most populated state behind California at No. 1 followed sequentially by Texas, Florida, New York and Pennsylvania.
While many government finance experts said the report should be helpful to legislators, some worry it doesn’t provide a full picture or “compare apples to apples” in certain cases.
“While the report is helpful it does not fully inform the discussion,” said Rob Karr, president and CEO of the Illinois Retail Merchants Association. “For example, when discussing sales tax, one cannot simply look at the state rate. Illinois has substantial local rates and states with sales taxes have different sales tax bases. Those factors must be taken into account to get a truly accurate picture of where Illinois stands vis-à-vis other states.”
Illinois doesn’t charge a sales tax on services like many other states.
Illinois ranks seventh nationally in total sales tax receipts for 2023, according to the report. But on a per capita basis, it ranks 31st.
Ralph Martire, executive director of the nonpartisan Center for Tax and Budget Accountability, said the report also “artificially inflates” the state’s corporate income tax because it includes the personal property replacement tax collections, which go to municipalities.
“It creates a perception that our state rate is out of whack and artificially high, when it is not,” he said. “While the numbers aren’t inaccurate, the comparison is.”
He also challenged the state’s rankings on elementary and secondary education spending, which lists Illinois at No. 4 nationally and No. 6 on a per capita basis.
“Illinois includes the legacy cost on pension debt and virtually no other state includes that,” Martire said. “It makes it look like we’re spending all this money on education, but a large chunk of it isn’t going into a classroom.”
Elsewhere in the report, it shows Illinois ranked No. 2 in the nation in motor fuel tax rates at 66.5 cents per gallon as of Jan. 1, 2024. Illinois is also No. 3 in motor vehicle tax revenue, only behind California and Texas.
Many of these taxes have an effect on the state’s business climate, some contend.
“The data … should help to drive policy initiatives in Springfield that maximize our state’s potential for business growth and job creation,” said Illinois Chamber of Commerce President and CEO Lou Sandoval. “Unfortunately, there isn’t just one single measurement from the report that demonstrates a clear path to that goal since business investment is driven by the totality of costs and benefits.”
Sandoval noted the report shows Illinois ranked third in unemployment as of October 2024. Only Nevada and California had higher unemployment rates than Illinois’ 5.3%.
“Illinois has some tremendous assets that don’t show up in that report: Transportation hub, talent pipeline, strong higher education systems, tech development incentives,” he said. “However, the report shows where improvement is needed.”
The report also examined some sin tax collections.
The $314.6 million in tax revenue from liquor the state received in 2023 was the eighth highest nationally, but 17th per capita.
The $2.98 state tax imposed on packs of cigarettes is the 12th highest in the country and generated $800 million in taxes for Illinois in 2023, the report shows. That was seventh highest total nationally, but 19th highest per capita.