Illinois Governor Proposes Social Media Fee to Boost State Revenue
Illinois Governor J.B. Pritzker is considering a groundbreaking plan to impose a fee on social media platforms, a strategy that could generate up to $200 million in additional tax revenue annually for the state. This proposal, known as the Digital Platform Fee, targets companies like Instagram and Facebook, charging them based on their number of active users in Illinois.
Details of the Digital Platform Fee Proposal
The fee structure is tiered, with companies facing monthly charges depending on their user base in Illinois. For platforms with 100,000 to 500,000 users, the fee is 10 cents per user above 100,000. Those with 500,000 to 1 million users pay 25 cents per user above 500,000 plus a $40,000 monthly fee. Companies with 1 million or more users are charged 50 cents per user above 1 million plus a $165,000 monthly fee.
A key provision in the proposal prohibits companies from passing these fees onto users, ensuring that consumers are not directly burdened. The revenue generated is earmarked for investment in Illinois' education system, addressing budget shortfalls and societal costs.
Rationale Behind the Social Media Fee
Governor Pritzker's office argues that social media platforms profit from practices that harm residents, such as surveilling youth and creating addictive algorithms. In a fact sheet, the office stated, "As big tech companies continue to profit off of surveilling youth, creating addictive algorithms, and abandoning their responsibility to keep kids and consumers safe, the American public is paying the price." The fee aims to cover costs associated with negative psychological impacts on youth and consumer scams affecting the elderly.
Budget Context and Precedents
This proposal comes as Illinois faces a roughly $2 billion budget shortfall for fiscal year 2027. While unique at the state level, it follows a similar move by Chicago, which enacted a social media tax on January 1, 2026, projected to generate $31 million in revenue. Other states, including California, New York, and Minnesota, have attempted similar taxes, with Minnesota's proposal in early 2025 estimating potential revenue of $92.7 million by fiscal year 2027.
The Digital Platform Fee is part of Illinois' fiscal year 2027 budget, reflecting a growing trend among state and local governments to hold tech companies accountable for societal impacts. If enacted, Illinois would join Chicago in pioneering this approach, potentially setting a precedent for other states nationwide.
