Chicago is tied with two other cities for the highest sales tax rates for a major U.S. city, adding another superlative for taxation of residents and visitors.
Chicago is home to the highest combined state and local sales tax rates in the nation, according to a new report from the nonpartisan Tax Foundation. Chicagoans pay a combined state and local sales tax rate of 10.25%. The city has held this dishonor since the Cook County Board passed a sales tax hike in 2016.
Long Beach and Glendale, Calif., share the top spot with Chicago. The report examined cities with over 200,000 people.
Chicagoans pay the city 1.25%, the county 1.75%, the transit authority 1% and the state 6.25% – for a total sales tax rate of 10.25%. The Tax Foundation specifically noted that many Chicago-area residents will shop online or in the suburbs to avoid paying the city’s high taxes. Even that work-around is being disrupted as online market places will be required to collect the state’s sales tax beginning Jan. 1, 2020.
When you add up sales, property and all the other local taxes and fees, Chicagoans are the most-taxed residents of any major city in Illinois. As of 2015, Chicagoans paid three times more in local taxes and fees than Naperville residents, twice as much as those in Rockford and nearly 20% more than residents of Evanston.
A 2018 Illinois Policy Institute analysis of 24 different taxes and fees – including those on cellphones, cigarettes, ridesharing and more – found Chicago ranked No. 1 on 10 of the tax and fee rates.
Chicagoans don’t just feel pain from their local leaders. State lawmakers just passed 21 new taxes and fees on them and all other Illinoisans.
Years of corruption, fiscal irresponsibility and a worsening pension crisis have allowed Chicago’s lawmakers to turn to taxes, fines and debt to generate revenue instead of slowing the growth of spending. The only way Chicago can give up the embarrassing title of highest sales tax rate in the U.S. is to reform the long-standing practices that have earned the city this distinction.