The biggest tax in Johnson's budget: the lease and cloud tax would go from 15% to 20%

It would raise about $234 million, more than twice the head tax. Last year's budget said the rate wouldn't rise before 2028, and the film-industry break has waited in committee since July.

By Chicago PoliticsUpdated Oct 23, 2026

The single biggest new piece of revenue in Mayor Brandon Johnson's 2027 budget is not the head tax. It is a higher Personal Property Lease Transaction Tax, the City tax on leasing or renting equipment and on many cloud software subscriptions.

The Mayor wants to raise the rate from 15% to 20%. His office expects it to bring in about $234 million in 2027, CBS Chicago and Block Club Chicago reported. That is more than twice what the head tax is projected to raise.

Why it matters: this tax is paid by the lessee, the person or business renting the item or paying for the software. That includes Chicago businesses of all sizes that pay for cloud services, lease copiers or rent equipment. Some alderpersons say a higher rate would reach ordinary residents and small firms, not only large companies, Block Club reported.

What the ordinance would change

The 2027 Revenue Ordinance (O2026-0029643) rewrites Section 3-32-030 of the Municipal Code. According to the ordinance text:

The general rate goes from 15% to 20% of the lease or rental price.
Leases of motor vehicles stay at 15%.
Equipment leased for film and television productions shot in Chicago would be taxed at 11%, if the production has a state film tax credit certificate or a City letter of registration and the leasing company registers with the Department of Finance.
The changes take effect Jan. 1, 2027.

In his budget address, Johnson said the change would ask "big tech companies like Amazon" to contribute more (watch at 1:34:31), and that the increases alone are expected to produce $234 million.

What our records add

The rate was supposed to hold until 2028. The current section of the code says the 15% rate "shall not be increased prior to January 1, 2028." That language came out of last year's budget deal. Ald. Nicole Lee (11th), the Budget Committee's vice chair, pointed this out to Block Club, saying the provision was meant to give businesses predictability. The Council can amend its own code, so the promise is not binding on a future vote, but changing it would take a vote of the Council.

Last year's rate came from the Council's own budget. The 2026 revenue ordinance that set the current rules was the Council's alternative plan, sponsored by Ald. Matthew O'Shea (19th) and passed 29 to 19 on Dec. 19, 2025.

How each ward voted

29 yea, 19 nay, 2 not voting · Dec 19, 2025 · Passed

Yea Nay Not voting

SO2025-0021719: the roll call, the timeline and the documents

The film rate has been waiting since July. The Mayor first proposed a lower lease tax rate for film and TV production as a separate ordinance, O2026-0027135, introduced July 15, 2026. It has been in the Committee on Finance for 100 days, still listed as referred. The new revenue ordinance folds the same idea into the budget.

The budget's efficiency consultant did not recommend it. At the Oct. 23 Budget Committee hearing, Ald. Matthew O'Shea asked Ernst & Young whether any of its recommendations called for a head tax or a higher lease tax. "That was not part of the report," the firm's representative answered (watch at 1:08:48).

Where alderpersons stand

The lease tax has drawn early objections, separate from the head tax. Block Club reported that some alderpersons said they would not vote to raise it again, warning it would fall on regular Chicagoans and push businesses out. Ald. Walter Burnett (27th) told Block Club he understands the need for revenue but is undecided on both the head tax and the lease tax increase.

Because the lease tax is so large, it is likely to be at the center of any negotiation. If the Council strips the increase, it would need to replace about $234 million, more than a quarter of the $882 million gap.

What's next

The revenue ordinance is in the Committee on Finance. The Budget Committee's department hearings continue through Nov. 10. The Council's public hearing on the budget is Dec. 8 at 11:30 a.m. The budget must pass by Dec. 31.