On Dec. 19, 2025 the Chicago City Council passed the city’s alternative budget bill (Record No. SO2025—0021719) despite opposition from Chicago Mayor Brandon Johnson who did not sign or veto the bill. Facing a $1.5 billion projected fiscal shortfall, Chicago’s budget bill increases the personal property lease tax and creates new taxes including the social media amusement tax (SMAT). 

Personal property lease tax rate increase 

On Jan. 1, 2026, the rate of the personal property lease tax (PPLT) increased to 15% (from 11%). Chicago's personal property lease tax is imposed on the lease or rental of personal property used in the city, including cloud computing services and software-as-a-service (SaaS) (treated as “non-possessory computer leases”). The PPLT is imposed on the lessee (the customer). However, the vendor is responsible for collecting and remitting, but if they fail to do so, the purchaser remains legally liable and must self-assess and remit the tax directly to the city. 

Social media amusement tax

Beginning Jan. 1, 2026, Chicago will impose a new social media amusement tax (SMAT) on businesses that collect consumer data on more than 100,000 Chicago consumers in a calendar year. The rate of the tax is $0.50 per the number of Chicago consumers per calendar month in excess of 100,000. 

Municipal Code of Chicago Section 4-156-1010 defines “social media” to mean websites, applications, products, and internet platforms that allow consumers to view, share and otherwise engage with images, videos, and audio presented in types and formats including, but not limited to, performance, promotions, memes, augmented reality, artificial intelligence, and live streams. “Social media” does not include any bona fide news website, application, or platform. “Social media business” means a for-profit entity that: (a) provides individuals with access to social media and (b) collects, maintains, uses, processes, sells or shares consumer data, other than consumer contact information, in support of the entity’s business activities. 

The SMAT is the latest example of Chicago’s broader municipal strategy to diversify revenue by expanding the Amusement Tax to cover electronically delivered amusements, including streaming services (video and audio), online games, and other digital entertainment content. 

What does CohnReznick think?

The PPLT increase and the new SMAT reflect Chicago’s ongoing efforts to secure revenue through novel applications to digital and software services. That trend has led to heightened attention from business groups, tax professionals, and companies operating in or servicing customers in Chicago. Since the obligations apply based on where the customer uses the software and online services, not where the provider is located, remote sellers may be required to register, collect, and remit the tax even if they have no physical presence in the city. This creates compliance burdens and complexities for out-of-state tech and media firms. In light of these changes, it is increasingly important that taxpayers evaluate their filing obligation under nexus requirements, pay close attention to customer location sourcing rules, and understand available exemption and exclusions under each tax regime.