Mayor wants to raise Chicago’s rental tax to 20%
Brandon Johnson proposes an increase in the Personal Property Lease Tax, which covers products beyond technology.
While Mayor Brandon Johnson wants to raise what’s often called the “cloud tax,” the charge in fact applies to a broad range of rented products.
Johnson proposes increasing Chicago’s Personal Property Lease Tax to 20%, up from 15%, a move that a majority of aldermen said in a letter dated Nov. 10 they won’t support.
The tax applies to all personal property rented within Chicago city limits and rented outside the city but used within. That includes tangible assets like construction equipment and intangible goods like digital software services.
The city’s municipal code defines taxable personal property broadly as “any and all property other than real property,” with real property generally being real estate, including land and permanent structures.
“When you go to Home Depot and rent tools, PPLT applies. You want to rent a bouncy house and chairs and tables, PPLT applies. You want [to] rent a tuxedo, PPLT is taxed,” Ald. Gilbert Villegas, 36th, told Fox 32’s The Chicago Report.
Johnson estimates the increase would bring in $234 million. Before he became mayor, the tax was just 9%, but he raised it to 11% in 2025 and then to 15% in 2026.
His proposal would keep vehicle leases taxed at 15% and reduce the tax on film production equipment to 11%.
How does Chicago’s lease tax compare with other cities?
Chicago already imposes the highest tax rate on software leases among the country’s largest cities. Johnson’s proposal would put Chicago’s rate at nearly double that of second-place Los Angeles, where leases are subject to the standard sales tax. Sales tax does not apply in Chicago to software leases.
In Illinois outside of Chicago, it’s standard for physical rentals to pay the 6.25% state sales tax and to not impose a lease tax on cloud-based software.
Who will pay the tax?
Johnson argues that the increase would primarily target “big tech” corporations. His press office says “large corporations generate 77% of PPLT revenue” and that the biggest payers include Google and Amazon.
That framing obscures who’s legally responsible for the tax.
Chicago’s municipal code explicitly places the obligation to pay on renters, not the companies providing the rental. The only thing the company is responsible for is collecting the tax and sending it to the city.
“Software as a service” products, including those for CRM, project management, customer support and accounting and marketing, face the PPLT tax. So do any cloud computing, databases and storage.
So while Johnson can use “big tech” as a political punching bag, in reality Chicago residents and businesses foot the bill.