Chicago does not have a city income tax, but it does impose a long list of other city taxes on top of what Illinois and Cook County already collect. The combined sales tax rate is 10.25%, one of the highest in the country, and the city adds its own levies on hotels, restaurants, parking, rideshares, streaming services, cloud software, real estate sales, utilities, cigarettes, bottled water, and checkout bags. Here is what each Chicago city tax actually costs and who pays it.
No City Income Tax
Your paycheck is not touched by a Chicago city income tax. Illinois has a flat state income tax of 4.95% on net income, and the state constitution bars municipalities from adding a local income tax unless the General Assembly grants that authority.1Illinois Department of Revenue. Income Tax Rates It never has. No Illinois city, Chicago included, collects an income tax of its own. A 2024 ballot measure known as “Bring Chicago Home” would have created a graduated real estate transfer tax, but voters rejected it, with 52.2% voting no.
Sales Tax: 10.25%
The combined sales tax on most retail purchases in Chicago is 10.25%. That figure stacks four separate taxes: 6.25% Illinois state, 1.75% Cook County, 1.25% City of Chicago, and 1% Regional Transportation Authority.2City of Chicago. Chicago Tax Rate Changes as of January 2025
Some purchases are taxed at a lower rate. Prescription and nonprescription medicines, medical appliances, insulin, syringes, and blood sugar testing supplies are taxed at 1% under state law. Qualifying groceries (not prepared meals) also get the reduced rate. Menstrual products are fully exempt from the state retailers’ occupation tax through December 31, 2026.3Illinois General Assembly. Section 130.311 Drugs, Medicines, Medical Appliances, and Grooming and Hygiene Products Watch the line here: shampoo, soap, and similar grooming and hygiene items do not qualify for the reduced rate, even when their labels make health claims. They are taxed at the full general merchandise rate.
Property Taxes
Property taxes are the largest local tax bill most Chicago homeowners see. The Cook County Treasurer’s Office collects roughly $16.1 billion in property taxes each year from more than 1.8 million parcels and distributes the money to about 2,200 local taxing bodies, including the City of Chicago, school districts, and park districts.4Cook County Treasurer’s Office. Duties and Responsibilities of the Cook County Treasurer Your bill equals the assessed value of your property multiplied by the combined rates of every taxing district covering your address, so two homes with similar market values in different Chicago neighborhoods can owe noticeably different amounts.
Exemptions That Cut Your Bill
Cook County offers exemptions that reduce the taxable value of your home. The Homeowner Exemption is available to anyone who owns and occupies a property as their primary residence and saves the average Cook County homeowner about $950 per year; it renews automatically once you apply. The Senior Exemption adds savings for owner-occupants age 65 or older and also renews automatically. The filing window for tax year 2025 exemptions opened on March 9, 2026.5Cook County Assessor’s Office. Property Tax Exemptions Missed a prior year? You can still claim exemptions for tax years 2021 through 2024 through the Certificate of Error process.
Real Property Transfer Tax
Selling or buying a home in Chicago triggers a city transfer tax of $5.25 per $500 of the sale price, an effective rate of 1.05%. The buyer pays $3.75 per $500 (the city portion) and the seller pays $1.50 per $500 (the CTA portion).6City of Chicago. Real Property Transfer Tax (7551) On a $400,000 sale, that is $3,000 owed by the buyer and $1,200 by the seller. Cook County and the state levy their own separate transfer taxes on top of this.
Restaurants, Liquor, and Hotels
Restaurant Tax
Every prepared meal or drink from a Chicago restaurant, cafe, or takeout counter carries an additional 0.50% restaurant tax on top of the 10.25% sales tax, bringing the effective rate to 10.75%.7City of Chicago. Restaurant Tax (7525) Businesses located inside Metropolitan Pier and Exposition Authority (MPEA) boundaries add another 1% MPEA food and beverage tax on top of that.8Illinois Department of Revenue. Metropolitan Pier and Exposition Authority (MPEA) Food and Beverage Tax
Liquor Tax
Chicago restructured its liquor tax effective March 1, 2026. Alcohol sold for off-premises consumption at package stores and grocery stores is taxed at 1.5% of the retail purchase price, replacing the old per-gallon system for those sales.9City of Chicago. Liquor Tax Changes Effective March 1, 2026 Bars and restaurants licensed for on-premises consumption still pay per-gallon rates through their distributors: $0.29 per gallon of beer, $0.36 per gallon of wine or liquor at 14% alcohol or less, $0.89 per gallon between 14% and 20%, and $2.68 per gallon for spirits at 20% or above.10City of Chicago. Liquor Tax (7573)
Hotel Accommodations Tax
Chicago’s hotel accommodations tax is 4.5% of the room charge. Vacation rentals and shared housing units (Airbnb-style listings) pay the 4.5% base plus a 6% surcharge, for a total city rate of 10.5%.11City of Chicago. Hotel Accommodations Tax (7520) and Vacation Rental and Shared Housing Surcharge (7520S) Stack the state and county hotel taxes on top and the effective rate on a standard Chicago hotel stay reaches roughly 17.5%. A proposal moving through City Council as of early 2026 would add up to another 1.5% for stays at downtown hotels with 100 or more rooms.
Amusement Tax (Including Streaming)
Live concerts, sporting events, and theater tickets are taxed at 9% of the admission charge. For electronically delivered amusements, the rate is 10.25%, which reaches video streaming, audio streaming, and online games.12City of Chicago. Amusement Tax (7510, 7510W, 7510S) Your Netflix, Spotify, and gaming subscriptions carry this Chicago tax as a line item; the providers collect and remit it. The extension to digital services took effect in 2015 and was one of the earliest of its kind in the country.
Getting Around: Parking and Rideshare
Parking Tax
Chicago’s parking tax is 23.25% of the parking fee, applied uniformly to daily, weekly, and monthly parking, seven days a week.2City of Chicago. Chicago Tax Rate Changes as of January 2025 A $30 daily garage charge comes out to nearly $37 after tax. The current rate took effect January 1, 2025, and applies to commercial lots and garages.
Ground Transportation Tax
Every Uber and Lyft trip carries a ground transportation tax. As of January 6, 2026, the rates are:
- Single rides: $1.13 per ride, plus a $1.50 Congestion Zone surcharge for any pickup or drop-off in that zone (seven days a week, 6 a.m. to 10 p.m.), plus a $5.00 surcharge for any ride touching O’Hare, Midway, Navy Pier, or McCormick Place.
- Shared rides: $0.53 per ride, plus a $0.60 Congestion Zone surcharge (weekdays only, 6 a.m. to 10 p.m.), plus the same $5.00 airport and venue surcharge.13City of Chicago. Ground Transportation Tax (7595)
A single rideshare from downtown to O’Hare can carry $7.63 in ground transportation tax before the fare itself. Choosing a shared ride cuts that tax substantially.
The Cloud Tax: Personal Property Lease Transaction Tax
Chicago’s Personal Property Lease Transaction Tax is 15% as of January 1, 2026, and it applies to the lease or rental price of personal property, including the nonpossessory lease of a computer used to input, modify, or retrieve data supplied by the customer.14City of Chicago. Personal Property Lease Transaction Tax (7550) In practice, that reaches cloud-based software (SaaS), data storage, and similar services where a Chicago user accesses a remote computer.15City of Chicago. Tax Rate Changes as of January 2026
Exemptions exist. Government bodies, charitable organizations, religious organizations, and educational institutions are exempt as lessees. Exempt lease types include medical equipment leased for personal use, leases between members of the same corporate group, and nonpossessory computer leases used for trading securities or commodities on registered exchanges.14City of Chicago. Personal Property Lease Transaction Tax (7550) Qualifying small new businesses can apply for a separate exemption.
Utility, Cigarette, Bottled Water, and Bag Taxes
Utility bills carry city taxes on top of state charges. The natural gas utility tax is 8% of gross receipts. The electricity tax runs on a per-kilowatt-hour basis, with a base rate for the first 2,000 kWh that steps down at higher usage levels. Telecommunications services carry a 7% city excise tax on gross charges, plus a $5.00 monthly 911 surcharge per phone line or wireless number.16City of Chicago. Tax Information These items show up as line items from ComEd, Peoples Gas, and your wireless carrier.
Cigarettes carry a Chicago-specific tax of $1.18 per pack of twenty, which stacks on top of Cook County and Illinois state cigarette taxes.17City of Chicago. Cigarette Tax (7506) Bottled water sold at retail within city limits is taxed at $0.05 per bottle, collected by wholesalers and passed through to retailers.18City of Chicago. Bottled Water Tax (1904, 1904IN) The Checkout Bag Tax applies at the point of sale to paper and plastic bags provided at retail stores.19City of Chicago. Checkout Bag Tax
Who Collects What
Property taxes go to the Cook County Treasurer’s Office, which distributes the money to the city and other taxing bodies.4Cook County Treasurer’s Office. Duties and Responsibilities of the Cook County Treasurer Sales tax is collected by the Illinois Department of Revenue, which remits Chicago’s share to the city. Everything else on this list, from the amusement tax through the checkout bag tax, is administered directly by the City of Chicago Department of Finance.16City of Chicago. Tax Information Businesses collect the applicable taxes from customers at the point of sale and remit them monthly or quarterly depending on the tax type and volume.
What Happens if You Pay Late
Missing a Chicago tax payment deadline gets expensive quickly. A 5% penalty applies immediately to any late payment. Interest then accrues at 12% per year from the day after the due date until the city receives payment. If the return itself is filed late (not just paid late), the filing penalty is the greater of 1% of total tax due (capped at $5,000) or 5% of the amount payable with the return.20City of Chicago. Tax Division FAQs For businesses collecting these taxes from customers, the combined penalty and interest exposure adds up within weeks.