As City leaders continue discussions around Chicago’s upcoming budget, one proposal receiving significant attention is an increase to the Personal Property Lease Transaction Tax (PPLT). This tax applies to a wide range of leased and cloud-based services that many businesses and residents rely on daily.
The Chicagoland Chamber of Commerce believes it is important to carefully evaluate how a further increase in the PPLT could affect affordability, competitiveness, and economic growth across the city. The Mayor’s current proposal would increase the PPLT rate from 11% to 15%.
Scope of the Current Proposed Increase
The PPLT increased by 22% last year. Under the current proposal, the tax would rise by an additional 36%, generating nearly $400 million in new revenue. Because the tax is applied to commonly used digital and business services, the increase would be reflected in higher costs for a broad range of users.
Impacts Across the Economy
While often discussed in the context of large corporations, the PPLT is paid by businesses of all sizes and passed through to consumers. Restaurants, retailers, grocery stores, pharmacies, and service providers rely on leased digital tools such as payment processing systems, scheduling platforms, accounting software, and other business technologies.
As a result, higher PPLT rates can translate into increased operating costs for small businesses and higher prices for customers, affecting everyday transactions throughout the city.
Competitiveness and Technology Costs
Chicago already has the highest technology-related lease tax in the country. A further increase would widen the gap between Chicago and peer cities, potentially influencing decisions about where businesses choose to invest, expand, or locate. The proposal also raises questions about alignment with broader state and regional efforts to attract technology, innovation, and high-growth industries to Illinois.
Affordability Considerations
Because the PPLT applies to widely used services, increases tend to be felt broadly rather than targeted. This raises concerns about affordability for households and small employers, particularly at a time when many are managing higher costs across housing, food, and other necessities. Software and cloud-based services are already taxed at a rate higher than the combined 10.25% sales tax, and further increases would add to the cost burden for users of these services.
Balancing Revenue Needs and Economic Growth
The Chicagoland Chamber of Commerce recognizes the importance of addressing the City’s fiscal challenges and ensuring stable revenue streams. At the same time, tax policy decisions should weigh long-term economic impacts, including affordability, business retention, and job growth.
As budget discussions continue, careful consideration of these factors will be essential to supporting a sustainable and competitive economic environment for Chicago. The Chicagoland Chamber continues to advocate for city-wide efficiencies in revenue generation and cost cutting, before adding more burdensome taxes to people and businesses across the city.