How Much Is Tax in Chicago? Sales, Property, and Vehicle

If you’re asking how much is tax in Chicago, the short answer is that most purchases carry a 10.25% combined sales tax, wages are taxed at Illinois’s flat 4.95% state income tax with no separate city income tax, and homeowners pay Cook County property tax calculated from an assessed value. On top of that, the city layers on specific taxes for dining downtown, hotel stays, streaming subscriptions, bottled water, vehicle stickers, and real estate transfers.

Sales Tax on Most Purchases

The 10.25% general sales tax rate in Chicago is built from four separate pieces stacked together.¹ Illinois takes the largest share at 6.25%, Cook County adds 1.75%, the City of Chicago adds 1.25%, and the Regional Transportation Authority collects 1% to fund transit.²

Groceries changed on January 1, 2026. Illinois eliminated its 1% state sales tax on grocery food, though the law lets municipalities and counties impose their own 1% local grocery tax by ordinance, and the RTA’s grocery tax within its boundaries still applies.³ Groceries in Chicago no longer carry the state portion, but your receipt may still show local tax.

Prescription drugs and medical appliances get a reduced state rate of 1%.² Local taxes still apply, but the total is well below 10.25%.

State Income Tax

Illinois uses a flat income tax. For tax year 2026, every resident pays 4.95% of net income regardless of earnings, and your employer withholds it from each paycheck.⁴

Chicago does not impose its own income tax. Unlike New York City or some Ohio municipalities, there is no additional local withholding for living or working in the city. The 4.95% state rate is the only income tax on wages.⁴

Property Tax

Property tax in Chicago starts with the Cook County Assessor, who determines fair market value on a triennial reassessment cycle. Residential property is assessed at 10% of that value, and most commercial property at 25%.⁵ The Illinois Department of Revenue then applies a state equalization factor to produce your equalized assessed value (EAV), and that EAV is multiplied by the combined tax rates of every local taxing district serving your property. Chicago Public Schools is typically the largest of those districts, alongside the Park District, the Metropolitan Water Reclamation District, and community college districts. The bill is normally paid in two installments.

Late payments carry interest of 0.75% per month, or 9% per year, starting immediately after each installment’s due date.⁶

Exemptions That Lower the Bill

Homeowner Exemption: available if you own and occupy the property as your primary residence. It reduces your EAV by $10,000, so actual savings depend on your local tax rate.⁷
Senior Citizen Assessment Freeze: if you are 65 or older with household income of $75,000 or less for tax year 2026, your EAV is frozen at the level from when you first qualified. Rates can still change.⁸
Disabled Veterans Exemption: reductions vary by disability rating, with full exemptions available for veterans rated 70% or higher.

You must apply through the Cook County Assessor’s Office, and missing the filing deadline forfeits the reduction for that tax year.

Dining, Hotel, and Bottled Water Taxes

Eating out downtown or at the airports costs a bit more than the standard sales tax. The Metropolitan Pier and Exposition Authority adds 1% on food and drinks sold for on-site consumption within its boundaries, which cover the central business district and both airports, bringing the combined tax on those meals to roughly 11.25%.⁹

Hotel stays face overlapping state, county, and city taxes, and downtown hotels in particular carry one of the heaviest lodging tax burdens in the country. Short-term rentals and shared-housing units are hit with a city base rate plus a surcharge totaling 8.5% before state and regional hotel taxes are added. Check the full breakdown before booking.

Non-carbonated bottled water sold in the city carries a flat $0.05-per-bottle tax regardless of size or price.¹⁰ Carbonated water, sparkling water, and seltzer are exempt.¹¹

Streaming and Cloud Services

Chicago taxes digital services in ways many residents don’t expect. Streaming video, music, and paid television subscriptions carry a 10.25% amusement tax as of January 1, 2025, and most major providers collect it automatically.¹²

Businesses face a heavier charge. The Personal Property Lease Transaction Tax, sometimes called the “cloud tax,” treats cloud computing, software-as-a-service, and similar subscriptions as leases of personal property. As of January 1, 2026, the rate on all such leases is 15%.¹³

Real Estate Transfer Tax

When property changes hands in Chicago, the city collects $5.25 for every $500 of the sale price.¹⁴ On a $400,000 home, that’s $4,200. The buyer generally pays the $3.75-per-$500 city portion, and the seller generally pays the $1.50-per-$500 CTA supplement that funds the Chicago Transit Authority.

Sellers also owe a combined Illinois and Cook County transfer tax of $0.75 per $500. On the same $400,000 home, the seller’s total obligation comes to $1,800 and the buyer’s to $3,000. Certain transfers, such as those between family members or involving government entities, may qualify for exemptions. For most market sales, the taxes must be paid before the deed can be recorded with the Cook County Clerk’s Office.

Chicago Vehicle Sticker

City residents who own a vehicle need a Chicago vehicle sticker in addition to Illinois state registration. For a standard passenger vehicle weighing 4,500 pounds or less, the 2026 sticker costs $105.18, with higher rates for larger vehicles.¹⁵

You get a 30-day grace period after the purchasing deadline. Miss it and a $60 late fee is added, or $30 for seniors at the discounted rate.¹⁵ Driving without a valid sticker can also draw a parking ticket.

Deducting Chicago Taxes on Your Federal Return

If you itemize, you can deduct state and local taxes on your federal return, including Illinois income tax and Cook County property taxes. Under the One Big Beautiful Bill Act signed in July 2025, the federal SALT deduction cap rose to $40,000 in 2025 and increases 1% each year through 2029, putting the 2026 cap at $40,400. For married couples filing separately, the cap is half that per person.¹⁶

Higher earners face a phasedown. For taxpayers with adjusted gross income above $505,000 in 2026, the $40,400 cap decreases by 30 cents per dollar over the threshold, bottoming out at $10,000.¹⁶ Given Chicago’s property tax bills and the 4.95% state rate, many homeowners will approach or reach the cap, so it’s worth running the numbers with a tax professional before deciding whether to itemize.

1
Tax Foundation. State and Local Sales Tax Rates, 2026
2
Illinois Department of Revenue. What Are the Retailers Occupation and Use Tax Rates in Illinois
3
Illinois Department of Revenue. FY 2026-11, Municipal and County Grocery Occupation Tax Rate
4
Illinois Department of Revenue. IL-700-T, 2026 Illinois Withholding Tax Tables
5
Cook County Assessor. Your Assessment Notice and Tax Bill
6
Cook County Treasurer. Who Are Late Paying Property Tax Bills
7
Cook County Assessor. Homeowner Exemption
8
Illinois Department of Revenue. Property Tax Relief – Homestead Exemptions, PTELL, and Senior Citizens Real Estate Tax Deferral Program
9
Illinois Department of Revenue. Metropolitan Pier and Exposition Authority (MPEA) Food and Beverage Tax
10
City of Chicago. Bottled Water Tax (1904, 1904IN)
11
City of Chicago. Revised Chicago Bottled Water Tax Guide
12
City of Chicago. Amusement Tax: Subscribers to Paid Television Programming (7511)
13
City of Chicago. Tax Rate Changes as of January 2026
14
City of Chicago. Real Property Transfer Tax (7551)
15
Office of the City Clerk. Chicago City Sticker FAQs
16
Bipartisan Policy Center. SALT Deduction Changes in the One Big Beautiful Bill Act