The measure now goes to Gov. Pat Quinn, a Democrat, who plans to sign it, the Chicago Sun-Times reported.
The increase in taxes on cigarettes, for which the rate has been 98 cents a pack for years, and other tobacco products is expected to generate about $350 million a year in additional tax revenue, enabling the state to receive another $350 million from the federal government for Medicaid, the healthcare program for the poor, the Chicago Tribune reported.
In addition, the measure would raise $50 million in fees generated from hospitals, which in turn would bring in $50 million more in federal funds for healthcare.
The tobacco tax is part of $2.7 billion worth of new revenue and spending cuts in the Medicaid program.
The higher tobacco tax, approved 31-27 by the Senate, comes after approval last week of $1.6 billion in Medicaid cuts. An additional $300 million had previously been moved to healthcare from other state funds.
No Senate Republicans voted in favor of the tobacco tax increase. Republican critics said the higher tax would send smokers across the state's border to buy cigarettes in states with lower taxes. Critics also said the tax shows how much the governor's administration and Democratic lawmakers had fallen short of cutting Medicaid by $2.7 billion.
The higher tax will raise the combined local and state taxes on a pack of cigarettes to $4.66 in Chicago, behind only the $5.85 tax in New York City, and bring the Illinois state tax on cigarettes to the 16th highest among U.S. states.