The Chicago head tax was a flat $4-per-month charge that large employers paid for each worker based in the city, in force from 1973 until it was fully repealed on July 1, 2014. It no longer exists. Mayor Brandon Johnson has tried twice to bring back a similar per-employee charge under a new name, and the City Council rejected the most recent attempt in late 2025.
What the Tax Was
Officially the Employers’ Expense Tax, the levy lived in Chapter 3-20 of the Municipal Code and applied only to businesses with 50 or more full-time employees who did at least half their work inside city limits during a calendar quarter.1The Civic Federation. Will Chicago Restore the Head Tax? A worker only counted toward the threshold if they earned more than $4,300 in that quarter, which kept part-time and very low-hour staff out of the calculation.
The rate held at $4 per employee per month for most of the tax’s life.2City of Chicago. Mayor Emanuel Applauds City Council for Ending Head Tax for Chicago Businesses A company with 200 qualifying employees owed $800 a month, or $9,600 a year. Payments were due quarterly, and the ordinance barred employers from passing the cost on to workers through payroll deductions. At its peak the tax pulled in about $35 million a year from roughly 2,700 companies, all of which flowed into the city’s corporate fund covering police, fire, and general operations.1The Civic Federation. Will Chicago Restore the Head Tax?
If a business crossed the 50-employee line in a quarter but dropped back below it in a later month of that same quarter, no tax was owed for the short month. That gave seasonal employers some breathing room, though most companies above the threshold stayed there year-round.
Who Was Exempt
Several categories of employers owed nothing no matter how large they grew:1The Civic Federation. Will Chicago Restore the Head Tax?
- Not-for-profit, educational, and charitable organizations
- Domestic workers employed in private homes
- Agricultural labor
- A parent, spouse, son, or daughter working for the business
- Insurance company employees
- Independent contractors, who are not employees to begin with
- Partners in a business partnership (though their employees still counted)
- Newspaper carriers under 18
The nonprofit carve-out was the largest in practical terms. It kept hospitals, universities, and major social-service agencies off the tax rolls even when they employed thousands of people in the city.
How the Tax Was Repealed
Business groups argued for years that the charge discouraged hiring and pushed employers to the suburbs. Mayor Rahm Emanuel made repeal an early priority. In November 2011, the City Council approved a two-step phase-out: the rate fell from $4 to $2 per employee in July 2012, then to zero in July 2014.2City of Chicago. Mayor Emanuel Applauds City Council for Ending Head Tax for Chicago Businesses The council formally repealed Chapter 3-20 in November 2012, with the final elimination date already set.3American Legal Publishing. Municipal Code of Chicago – Chapter 3-20 Reserved
Is There a Head Tax in Chicago Now?
No. As of early 2026, Chicago does not impose any head tax or per-employee surcharge on employers. The question keeps coming up because Mayor Brandon Johnson has pushed to bring one back under a different label, the “Community Safety Surcharge,” in successive budget cycles.
The first attempt, introduced during the 2024 budget process, would have charged $21 per employee per month on companies with more than 100 Chicago workers, with a projected $100 million in annual revenue. When council support faltered, the administration floated a narrower version aimed at companies with 500 or more employees at $33 per worker per month. Neither passed.
Johnson revived the $21 proposal for his 2026 budget, again targeting employers with 100 or more workers. The City Council voted it down 30-18 in late 2025 while approving a $16.6 billion overall budget. Opponents said the charge would push large employers out of the city at a moment when downtown office vacancies were already high.
Not the Same as Bring Chicago Home
The “Bring Chicago Home” measure sometimes gets lumped in with head tax talk, but it is a separate issue. That was a March 2024 referendum on restructuring the city’s real estate transfer tax to fund homeless services. It had nothing to do with per-employee taxation of employers.