Mayor Brandon Johnson and council members passed their 2025 city budget just under the wire — and just in time for Chicagoans to start paying more as the calendar turns to 2025 for the many tax, penalty and fee increases that the political city leaders have chosen to take stock. books.
The chaotic budget battle had its hard lines. Johnson refused to cut spending through widespread layoffs and service cuts, and councilors rejected his proposals to increase property taxes.
So the city's new spending plan ultimately came about in large part thanks to a series of smaller — and theoretically less politically toxic — increases that are expected to raise nearly $200 million next year. That bill is widespread and targets everything from Netflix subscriptions and business cloud computing to drivers speeding because of cameras and pedicab licenses.
“It was a matter of catching up in the industry and other major cities,” said Johnson ally Ald. William Hall, 6th. “Chicago must keep pace with inflation, rising industrial costs and housing needs. And to do that, it costs money.”
The fee, fine and tax buffet that City Hall settled was not the original plan. Johnson first proposed closing the city's budget hole with a $300 million property tax increase. Councilors quickly shot down the idea and then rejected two smaller property tax increases that Johnson also sought.
The mix City Hall opted for included a final batch of $23.6 million in “operational efficiencies” and modest staff cuts, plus some one-time fixes: $74 million in cuts to federal COVID-19 stimulus spending, culminating in a scrapped guaranteed basic income program, $16.5 million from 'enhanced collections' and revenue from bond refinancing were used to close the budget gap in lieu of an outstanding debt of 40 million dollars to pay off.
Councilors and the mayor also dropped some tax and rate proposals. The council rejected Johnson's plan to increase taxes on wholesale liquor by 35% to raise $10.6 million. Black Caucus councilors also successfully opposed higher waste collection rates. A plan to tax legal hemp products came to nothing.
Yet in many ways, Chicagoans will pay more to keep city government running.
The personal tax rate will increase from 9% to 11%. The increase — which Johnson's Office of Budget and Management estimates will generate an additional $128 million each year — is by far the largest revenue boost created.
The increase will mainly affect companies, more than 4,000 of which file a tax return, according to the OBM. The tax affects payments for cloud computing software, including many of the online work tools that workers and businesses increasingly rely on.
In a new tech-based increase, the tax on streaming services and cable TV will rise from 9% to 10.25%, expected to raise $12.9 million. The increase will affect regular TV viewers and subscribers of services like Netflix and Hulu. The tax was last increased in 2009, and the new increase brings the rate in line with the city's sales tax, the OBM said.
The budget also finds several vehicle-oriented revenue sources.
Johnson will expand Chicago's network of automated speed cameras in an effort to ticket more drivers next year. His administration estimated the new cameras will generate $11.43 million in revenue.
Like the more than 100 such cameras already in use, the cameras issue $35 tickets to drivers who drive between 6 and 10 miles per hour over the speed limit and $100 tickets to drivers who go even faster. While details remain unclear on exactly how many new cameras will be added citywide, they will go “where councilors want them,” around schools and parks “where there is a danger” to residents, Hall said.
The tax rate on parking services and parking garages will increase from the current rate of 20% to 22% to a citywide rate of 23.25%, a boost expected to generate $1.3 million annually. The change equalizes costs for weekdays and weekends “for ease of compliance,” the OBM said.
The cost for a sheet of 15 daily parking tickets for on-street parking will increase from $8 to $15. The Johnson administration expects the change to generate $1.5 million.
Similarly, the cost of adding a vehicle parking permit in Chicago will increase from $25 to $30. The tax will rise again to $35 in 2026. The mayor's team expects the change to raise $940,000 by 2025 . The rate increase will affect Chicago's 202,000 drivers who use zone permits that allow many to park on neighborhood streets. But it won't apply to seniors, who will continue to pay $25.
The fee to transfer or reissue a Chicago vehicle sticker will increase from $5 to $20. The change does not apply to seniors, who will continue to pay $5. The Johnson administration expects the change to generate $445,000.
The cost of a two-year license for drivers of licensed taxis, liveries and pedicabs will increase from $5 to $40. The rate increase is expected to generate $108,000 and does not include ride-hailing drivers, who are subject to other municipal regulations .
The city has also increased fines for drivers who violate driver's license rules, for example by refusing services based on discrimination or excessive fares. Those fines will increase from a current range of $50 to $400 to a range of $75 to $1,000. The Johnson administration expects the increase to raise $14,000.
In another change in the automotive sector, congestion charges on weekday journeys in the city center will now also be applied to weekend journeys from 6am to 10pm. The OBM expects the change to generate $8.1 million.
But it's not all bad news for passengers: the surcharge rate will drop from $1.75 to $1.50. Councilors had considered expanding the area affected by the surcharge, but ultimately did not expand the boundaries beyond the Near North Side, Near West Side and downtown.
In a change that shoppers might notice, the city's tax on shopping bags will increase from 7 cents to 10 cents. The Johnson administration expects the change to generate $5.1 million.
The increase is the first to the city's shopping bag tax since it went into effect in 2017. The city will also now keep a larger share of the dollars brought in by the tax. While retailers previously received 2 cents per bag to help with fulfillment, they now receive just one cent.
Chicago is introducing new fees and fines that will affect access to the utility tunnels under the city's streets. The fees include a $500 right-of-way permit and a $100 per foot cable run fee, while fines for non-compliance will range from $500 to $5,000. The Johnson administration expects the change to generate $1 million.
The compensation is partly an apparent attempt to better organize road and infrastructure work.
“The lack of coordination results in excessive sidewalk cuts and potential damage to the city's above- and below-ground infrastructure,” the OBM wrote in a presentation shared with the Tribune.
The fine associated with violating general licensing provisions for businesses and professions will increase from $200 to $1,000 to a new range of $400 to $5,000. The Johnson administration expects the change to generate $428,000. According to the OBM, the fine increase will mainly affect companies. Current licensing compliance fees average $125, a price close to the current minimum fine, the office said.
The cost of a two-year wholesale food permit will increase from $660 to $1,320. The Johnson administration expects the change to generate $155,000. The permit is required for businesses that make, package, distribute or store food, but the change will not affect restaurants, bars or supermarkets, according to the OBM. The fee increase brings licensing fees in line with those of retail food companies, the office said.
The budget also relies on Chicagoans paying $16.5 million in old tickets for vehicle and public highway violations that occurred years ago. Johnson's government will allow residents to pay long overdue tickets without paying their overdue fines. The amnesty program will start in April and last approximately three months. It will affect vehicle violations for offenses such as parking and speeding, plus late payment fines for commercial driveways and signs.
Next year, bridging the gap could become even more difficult. Experts, rating agencies and councilors have shared fears throughout the budget process that Chicago is failing to adequately address the structural problems in its finances.
Earlier this year, Johnson's finance team projected a budget deficit of $1.12 billion for 2026, a figure that does not take into account new revenue lines and cuts to vacant positions in Johnson's final budget. Although budget director Annette Guzman suggested earlier this month that the 2026 deficit would be lower than initially forecast, she gave no range.
When the time comes for City Hall to close that budget hole, councilors could face even more of the political pressure that led them to reject higher property taxes as their 2027 re-election effort draws closer. Their recent budgetary efforts will also make it easier for them to tap into solutions.
A continued effort to tax hemp products — possibly introduced at the state level with the support of Governor J.B. Pritzker — or an effort locally to reinstate the state's soon-to-be-repealed grocery tax are likely part of future budget-passing efforts. Johnson has also pledged to look for ways to “challenge the ultra-rich to pay their fair share,” but shared few clear plans on how he might do that.
