Chicago Mayor’s Budget Proposes Head Tax, New Levies on Cloud, Social Media, Yachts

The mayor says new revenue is needed to protect services, while critics say it could drive employers and investment out of the city.

Chicago Mayor Brandon Johnson testifies before the Committee on Oversight and Government Reform on Capitol Hill, on March 5, 2025. Madalina Vasiliu/The Epoch Times

Chicago Mayor Brandon Johnson is seeking to plug a $1.15 billion deficit with a sweeping package of new taxes and fees on large employers, tech platforms, and high-end assets, unveiling a $16.6 billion 2026 budget that raises levies on cloud services and social media users, triples mooring fees for yachts, and revives a controversial head tax.

Johnson formally unveiled the proposal to the City Council on Oct. 16, billing it as a budget that protects working families by shifting the burden onto corporations and the “ultra-wealthy.”

The plan abolishes the city’s grocery tax and lowers the motor vehicle rental tax from $2.75 to $0.50, while introducing a $21-per-employee head tax on companies with more than 100 workers. It also raises from 11 percent to 14 percent the Personal Property Lease Tax—often called the “cloud tax”—which applies to digital services and software platforms such as cloud computing, streaming, and AI tools like ChatGPT.

In addition, the budget proposes a $0.50-per-user tax on large social media platforms with over 100,000 Chicago users. New taxes on online sports wagering and a tripling of yacht mooring fees round out the package, which Johnson cast as part of a progressive strategy to protect core city services. The proposal also draws on a $1 billion Tax Increment Financing surplus and identifies more than $200 million in departmental savings through hiring freezes, contract reductions, and real estate consolidation.

“We will work side by side with anyone across the state who wants to champion real progressive revenue,” Johnson said in a statement. “Our budget proposal asks large corporations and the ultra-wealthy to chip in more so that working families are not burdened with higher property taxes or grocery taxes, or garbage fees.”

United Working Families Illinois said in a statement on social media that Chicago should not hesitate to tax wealthier residents.

“Chicagoans deserve a budget that funds life-saving services like mental healthcare and violence prevention,” the group said. “We had a Head Tax for 40 years. Tax the rich, fund our communities.”

Fiscal watchdogs were far more skeptical. The Illinois Policy Institute said that taxes targeting corporations and high earners could backfire by driving investment out of the city.

“Taxes that may be framed as targeting the ‘ultra-rich’ could push more businesses to leave the city or avoid investing here altogether, worsening the city’s long-term revenue outlook,” the group noted, adding that the plan fails to address pensions or long-term structural reform.

The Chicagoland Chamber of Commerce labeled the plan a “tariff on jobs” and said it would make Chicago less competitive for employers.

“Rather than embracing shared sacrifice, this budget seeks to tax and borrow its way out of a deficit and, in the process, disincentivize job creation and hiring, deter relocation and expansion, and make Chicago less attractive at a time when national and global competition for jobs and investment is at an all-time high,” Jack Lavin, CEO of the Chicagoland Chamber of Commerce, said in a statement. “The best way to address our fiscal challenges and strengthen essential city services is through growth.”

Several aldermen signaled they may not support the head tax or other corporate levies. Ald. Brian Hopkins (D-2nd ward), in remarks to the Chicago Tribune, dismissed the proposal as politically unworkable.

The budget “is dead on arrival,” he said.

“There’s not 26 votes right now to support a head tax at this level,” he said.