As 2026 begins, Illinois will roll out a wide range of new laws that impact everything from artificial intelligence in hiring to grocery taxes, worker protections, and prescription costs. Signed by Governor JB Pritzker, these laws aim to modernize the state’s approach to employment rights, consumer protections, and corporate taxation—though not without controversy.
Let’s take a closer look at what’s changing on January 1, 2026.
Table of Contents
AI-Hiring
Regulating Artificial Intelligence in Employment
Under House Bill 3773, Illinois becomes one of the first states to regulate how employers use AI in employment decisions.
Key provisions:
- AI tools cannot result in discrimination based on race, gender, age, or disability.
- Employers must notify employees and job applicants when AI is being used and explain how it works.
- Using ZIP codes to infer protected characteristics is banned.
- Enforcement falls under the Illinois Department of Human Rights (IDHR).
Supporters say the law prevents algorithmic bias. Critics warn it may lead to more lawsuits and raise compliance costs for businesses.
Grocery Tax
1% State Grocery Tax Eliminated
Part of the FY2026 Budget Bill, this law repeals Illinois’ 1% state grocery tax, saving consumers money on food. But there’s a catch:
- Municipalities can implement their own 1% grocery tax if adopted by ordinance before October 1, 2025.
- As of now, 656 municipalities have opted in to implement the local tax.
This shift replaces state-level tax savings with local authority, allowing communities to decide what works best for them.
Nursing Mothers
Paid Breaks for Nursing Mothers
Senate Bill 0212 expands the Nursing Mothers in the Workplace Act, now requiring:
- Paid break time (not unpaid) for nursing mothers to express breast milk.
- Breaks must be paid at the employee’s regular rate.
- Employers cannot deduct from paid leave to cover these breaks.
- Applies up to one year post-childbirth.
This law enhances work-life balance and maternal rights, especially for lower-wage or hourly workers.
Corporate Tax
Major Changes to Corporate Tax Reporting
The FY2026 budget (HB 2755) introduces significant tax reforms for multistate corporations. The big change?
- Illinois adopts the Finnigan method for combined reporting.
- Now, all sales by group members (even those without Illinois nexus) count toward the state’s tax base.
- Reduced GILTI deduction: now only 50% deductible.
- Tightens rules on interest expense add-backs.
This is expected to raise hundreds of millions in new revenue—but many businesses say it makes Illinois less attractive for investment.
Prescriptions
Prescription Drug Coverage Improvements
New requirements apply to insurance policies issued or renewed in 2026:
- Caps out-of-pocket costs for inhalers.
- Limits cost of epinephrine auto-injectors (twin-packs) to $60.
- Requires coverage for brand-name drugs during shortages of generics.
Insurers argue this will raise premiums, but for patients, it means more predictable and affordable care.
Other Laws
Additional Laws Taking Effect Jan. 1, 2026
Here’s a roundup of other key laws you’ll want to know:
| Law/Act | What It Does |
|---|---|
| Workplace Transparency Amendments | Voids out-of-state law clauses, short statutes of limitation, and anti-worker speech restrictions. |
| Worker Safety Protections (SB 1976) | Prevents Illinois from lowering safety standards below 2025 federal levels. |
| Illinois Human Rights Act Updates | Makes fact-finding conferences optional; adds new civil penalties (non-retroactive). |
| Blood & Organ Donation Leave | Now includes part-time employees. |
| CFL Ban (HB 2363) | Bans sale of screw/bayonet base CFLs (mercury lights). |
| Plastic Toiletries Ban (SB 2960) | Applies to hotels with <50 rooms. |
| Alzheimer’s/Dementia Screening (HB 3328) | Mandatory before entry to assisted living/shared housing. |
| Underground Utilities Law | Full electronic response system implementation (JULIE, Inc.); mandatory for facility owners. |
| Veteran Pet Adoption Fees | Fee waivers for veterans now optional, not mandatory. |
| Illinois Receivership Act | Creates comprehensive framework for court-appointed receivers. |
| Funeral Honors Leave | New job-protected leave for qualified veterans or armed forces members participating in honor details. |
What’s Next?
These laws reflect a broader trend in Illinois: protecting workers, modernizing tax codes, and responding to technology’s impact on civil rights. While some businesses and insurance companies voice concerns over cost and competitiveness, others see a state pushing for fairer and more inclusive practices.
Stay informed, especially if you’re an employer, business owner, or consumer in Illinois. Some of these changes could directly impact your paycheck, your taxes, or your rights at work.
FAQs
Is AI hiring now regulated in Illinois?
Yes, starting Jan. 1, 2026, under House Bill 3773.
Is the state grocery tax gone?
Yes, but local governments can add their own 1% tax.
Do nursing breaks now have to be paid?
Yes, for up to one year after childbirth.
What’s changing for corporate taxes?
Illinois is using the Finnigan method for combined reporting.
Are inhaler costs being capped?
Yes, new insurance rules will limit out-of-pocket costs.
