Lawmakers raised the state income tax to 5% from 3% in a bid to close the state's deficit, which could be as large as $15 billion, The New York Times said.
It's the first such tax increase in the state for two decades.
The debate on the bill carried late into the night, with the final vote tallied after 1 a.m. local time. Even among its supporters, the increase was unpopular.
Illinois's finances have grown increasingly precarious as the deficit grows and the state collected unpaid bills worth $8 to groups including doctors and social services agencies. There have even been signs that bond investors are growing concerned about the state finances.
Lawmakers raised the corporate tax rate to 7% from its current rate of 4.8%. The state's spending growth will be limited from one year to the next over the next four years.
Republican lawmakers opposed the increases, saying the state should do more to slash spending.
Roger L. Eddy, a Republican representative, said lawmakers were "making up for our mistakes" on the back of taxpayers.