Illinois politicians finally gave business some breaks in 2025

State lawmakers and local leaders avoided taxes and cut regulations in 2025 to improve the state’s business climate, reduce costs and signal that job creators matter.

The progress was welcomed because far too often and for far too long Illinois state and city leaders have abused businesses to bail themselves out of fiscal mismanagement and spending increases. We’ll take the wins, but let’s keep going in the New Year.

The health of business is key to Illinois’ economic well-being, and our key sector also is our most vulnerable to politicians: small businesses. Nearly 99% of net new jobs created in Illinois since the pandemic came from businesses with fewer than 20 employees, amounting to about 172,000 jobs since 2020.

These businesses also are delivering faster wage growth. Since 2020, wages at businesses with fewer than 50 employees grew more than 30%, outpacing both mid-sized firms and large corporations.

For policymakers the lesson is clear: When businesses succeed, Illinois’ economy succeeds. The continued vitality of these employers means more jobs, better wages and abundant opportunity across the state — particularly in Cook County, where small firms have been the only net job creators since the pandemic.

Here’s what Illinois got right regarding business in 2025.

Rejecting tax hikes

One of the most immediate wins came from Chicago and other cities missing the Oct. 1 deadline to reinstate a local grocery tax. As a result, Chicagoans will avoid paying the tax through at least the first half of 2026, saving families an estimated $40 million over six months. Other large cities also will let grocery taxes end Dec. 31, including Springfield.

Illinoisans, as well as grocery stores, neighborhood markets and restaurants, have been struggling with inflation and rising food costs. Removing this tax alleviates some of the burden on residents and the local businesses that depend on steady foot traffic to operate.

Next, leaders rejected a first-in-the-world tax on unrealized capital gains and a statewide delivery tax that would’ve charged a flat fee on every purchase to fill a Chicago-area public transportation deficit. These would have been disastrous for Illinois residents and businesses.

Unfortunately, lawmakers did pass an increase to the Cook County and collar counties’ sales taxes. They decided most of the Regional Transportation Authority budget gap will be filled by shifting already-collected revenue from the transportation fund rather than from additional, new tax hikes.

Last, most Chicago aldermen have adopted a more business-friendly mindset during Chicago’s budget battle, with a large contingency rejecting Mayor Brandon Johnson’s plan to reinstate a “head tax” on employers. These aldermen cited the tax’s anti-growth, anti-business effects as reasons to find alternative plans that don’t punish the city's largest job suppliers.

Easing government regulations

Illinois progressed when state lawmakers ended a 40-year ban on building large-scale nuclear energy facilities. Lifting the nuclear moratorium should strengthen Illinois’ energy reliability, lower long-term costs and position the state to compete for advanced manufacturing, data centers and artificial intelligence investments. The moratorium reversal sent the message that Illinois is open to innovation, private capital and long-term economic growth.

Tech companies already have signaled strong interest in Illinois’ nuclear capacity, with firms such as Meta, Google and Microsoft pursuing long-term nuclear energy contracts. Meta’s deal supporting the Clinton Clean Energy Center preserved more than 1,100 high-paying jobs while replacing taxpayer subsidies with private investment — a model that benefits workers, businesses and taxpayers alike.

Chicago city leaders also embraced modern attitudes toward work by eliminating college degree requirements for most city jobs. By shifting toward skills-based hiring, the city opened the door to a broader workforce, which should reduce hiring bottlenecks and create new pathways to stable employment.

Illinois still faces serious fiscal challenges, but this year proved progress is possible when lawmakers work to eliminate barriers for businesses that will strengthen the economy.

The path forward is clear: continue prioritizing economic competitiveness and policies that let businesses grow. When Illinois chooses reforms that respect job creators and taxpayers, everyone benefits — and these bright spots show better choices are within reach.

• Matt Paprocki is the president and CEO of the Illinois Policy Institute.