SPRINGFIELD, Ill. (WTVO) — When the clock strikes midnight on January 1, 2026, Illinois will implement a series of new laws signed by Gov. JB Pritzker, affecting workplaces, employee rights, corporate taxation, and more.
Regulation of Artificial Intelligence in Employment
House Bill 3773 amends the Illinois Human Rights Act, making it a civil rights violation for employers to use AI tools that result in discrimination based on protected characteristics such as race, gender, age, or disability in hiring, promotion, discipline, termination, or other employment terms. Employers must notify workers when AI is used and explain what it evaluates. Zip codes cannot be used as proxies for protected characteristics. The Illinois Department of Human Rights (IDHR) will enforce the law and issue clarifying rules on notice requirements.
Elimination of the 1% State Grocery Tax
The FY2026 Budget Bill repeals the state’s 1% grocery tax, potentially saving consumers money. Municipalities and counties can impose their own 1% grocery tax if an ordinance was adopted by October 1, 2025. Over half of Illinois municipalities (656) opted to establish a local grocery tax.
Nursing Mothers in the Workplace Act
Senate Bill 0212 requires employers to compensate nursing mothers for break time used to express breast milk, up to one year after childbirth. Employers cannot require these breaks to be covered by paid leave.
Major Corporate Tax Changes
The FY2026 budget implementation bill (HB 2755) switches Illinois to the “Finnigan” method for combined reporting, counting sales by group members without direct Illinois nexus toward the Illinois sales factor. This, along with reduced GILTI deductions and stricter interest expense add-back rules, is expected to increase taxable income for many large corporations.
Prescription Coverage Changes
New 2026 policies must cap out-of-pocket costs for prescription inhalers, cover brand-name drugs during generic shortages, and limit epinephrine auto-injector twin-pack costs to $60. Insurers warn these changes may increase premiums.
Other Laws Taking Effect Jan. 1, 2026
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Expanded Restrictions on Employment Agreements: Voids clauses shortening statutes of limitations, requiring non-Illinois law/venue, or restricting concerted activity; broadens “unlawful employment practice” definition.
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Worker Safety Protections (SB 1976): Prevents reducing state safety standards below 2025 federal levels if federal rules are weakened.
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Illinois Human Rights Act Changes: Fact-finding conferences become discretionary; introduces new civil penalties (non-retroactive).
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Blood and Organ Donation Leave Expansion: Extends leave to part-time employees.
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Compact Fluorescent Lamp Ban (HB 2363): Prohibits sale of screw-base or bayonet-base CFLs containing mercury.
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Single-Use Plastic Toiletry Bottles Ban Extension (SB 2960): Applies to hotels with fewer than 50 rooms.
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Alzheimer’s/Dementia Screening (HB 3328): Required before admission to assisted living or shared housing.
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Underground Utilities Damage Prevention Updates: Full implementation of electronic positive response system via JULIE, Inc.; mandatory membership for facility owners.
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Veteran Pet Adoption Fees: Waivers become optional for shelters.
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Illinois Receivership Act: Introduces a comprehensive framework for court-appointed receivers.
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Funeral Honors Detail Leave: Provides new leave for qualified veterans or armed forces members.
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