State lawmakers passed a major transit reform bill last week to prop up the CTA, Metra and Pace with $1.5 billion in additional tax revenue — helping to stave off cuts that would have affected millions of transit users.
But the bill — now awaiting Gov. JB Pritzker’s signature — affects more than just users of public transit. The legislation raises the Chicago region’s sales tax and shifts the state’s gas tax revenue to transit. It also increases tollway fees, raising up to $1 billion annually.
“We can breathe a sigh of relief knowing our transit system isn’t going to unravel, but there will be pushback by retailers over the sales tax boost in particular,” said Joseph Schwieterman, a transit expert who is the director of DePaul University’s Chaddick Institute for Metropolitan Development. “Consumers will likely notice the tollway fee increases most acutely.”
Here’s what the bill means for Illinoisans.
Tollway fees
Tolls on the Illinois Tollway will increase 45 cents for passenger cars and 30% for commercial vehicles. In total, that’s expected to raise up to a $1 billion a year — a concession to labor groups for losing a sales tax on motor fuel and instead, redirecting the tax revenue from the state’s Road Fund to transit.
A Tollway spokesman on Wednesday said the agency has not yet determined when those increases would happen.
The change means the 75-cent I-Pass toll increase to O’Hare Airport would rise to $1.20. Those without an I-Pass would see their fares increase from $1.20 to $1.65.
The bill allows tolls to increase every two years to match the consumer price index, capped at 4% yearly. That’s expected to bring an additional $100 million per year, Marc Poulos, who represented labor groups in the bill negotiations, told lawmakers.
That hike further exacerbates the burden on suburban tollway drivers, said Adam Hoffer, director of excise tax policy at the Tax Foundation.
To more evenly spread the tax burden, Illinois could implement a statewide toll system, or charge drivers based on vehicle miles traveled, Hoffer said. It was an option lawmakers were considering when crafting the bill.
No fare hike
Various transit agencies are restricted from raising fares within the first year of the bill, after it goes into effect June 1, 2026. The Regional Transportation Authority — which approves the budgets for the CTA, Metra and Pace — on Tuesday said it’s walking back plans for 10% fare hikes that it had been planning for Feb. 1.
Lawmakers said the yearlong pause on fare changes is meant to give time for the newly formed Northern Illinois Transit Authority, which will replace the Regional Transportation Authority, time to “stabilize” before any potential fare hike.
Sales tax increase
The legislation authorizes the Regional Transportation Authority to increase sales tax by 0.25% in the Chicago area and collar counties, which would take effect June 1, 2026. In Chicago, the combined sales tax rate is 10.25%.
The Illinois Retail Merchants Association declined to comment, and the Illinois Restaurant Association didn’t respond to a request for comment.
The bill redirects revenue from the state’s sales tax on motor fuel to transit operations, collecting $860 million a year. All interest on the state’s $8 billion Road Fund will be directed to transit, collecting nearly $200 million a year.
“Changing local sales tax rates and transferring cash from the state treasury to local public transit boards is more straightforward than introducing new taxes that would have likely been litigated for years and taken significant time to administer,” said Maurice Scholten, president of the Taxpayers’ Federation of Illinois.
Fare integration
Under the legislation, the Northern Illinois Transit Authority is given power to coordinate service and fares between CTA, Metra and Pace.
The bill calls on the new agency to implement fare integration, which will allow passengers to transfer between trains and buses — regardless of which agency they belong to — without buying a new ticket, as is the case now.
What experts think
Transit, environmental and other groups lauded the legislation.
The bill means “riders can expect safer, faster, and more accessible service, with renewed commitments to equity and mobility for people with disabilities,” the nonprofit Active Transportation Alliance said in a statement. The group also expects new policies to encourage walkable development around transit stations.
The $1.5 billion annual investment in public transit is “the most significant step forward for our transit system in decades,” Active Transportation Alliance Executive Director Amy Rynell said in a statement.
Environmental group Illinois Environmental Council called the recent legislative session the “biggest 24 hours in state climate action in state history.”
The bill “addresses air and climate pollution in Illinois’ transportation sector, which is the state’s largest source of greenhouse gas emissions,” the council said.
Dany Robles, Illinois Environmental Council’s legislative relations director, said in a statement, “While the federal government repeals climate policies, Illinois is investing $1.5 billion dollars in public transit, which is key to mitigating air and climate pollution.”
What wasn’t included
Lawmakers removed from the bill a proposed 7% tax on streaming services like Netflix, and additional fees on tickets to large concerts, sporting events and other performances. The amended bill also removed a proposed and unprecedented “billionaire tax” on unrealized capital gains for the ultra-wealthy.
“Many of the flawed tax proposals that had been discussed were not included in the final bill,” said Scholten of the Taxpayers’ Federation of Illinois.
While the state will redirect tax revenue to fund transit, challenges remain.
“This is simply moving funds from one bucket to another and will likely exacerbate other budget issues in Springfield next legislative session,” said Hoffer of the Tax Foundation.