July 27, 2018
The Chicago City Council on July 25, 2018 approved a 2.0% surcharge on shared housing and vacation rentals in the City of Chicago. The 2.0% surcharge is in addition to an existing 4.0% surcharge on vacation rentals or shared housing units, bringing the total taxes specific to home sharing to 6.0%. The home sharing rates are applied on top of the City of Chicago’s composite hotel tax, which is 17.4%. This means that home sharing will now be charged a total tax rate of approximately 23.4%.
The City Council approved Ordinance 2018-4988 establishing the 2.0% surcharge through a vote of 49 to 0 with one absence. The Ordinance will amend section 3-24-030 of the Municipal Code of Chicago dealing with the Hotel Accommodations Tax. The stated purpose of the surcharge is to fund housing and related supportive services for victims of domestic violence. The tax is expected to generate $1.3 million in revenues annually.
The existing 4.0% home sharing tax was approved by the City Council on June 22, 2016 for the purpose of funding supportive services related to housing for the homeless. The tax went into effect on July 1, 2016. According to the City, the tax generated approximately $3.0 million in revenue in the first full year of collections from July 2016 through June 2017.
The City of Chicago has an effective hotel tax rate of 17.4%, which consists of tax rates imposed by several government agencies. The State of Illinois, City of Chicago, Cook County, the Illinois Sports Facilities Authority and the Metropolitan Pier and Exposition Authority all impose a hotel tax for hotel room rentals within the City of Chicago. The table below details the effective tax rates of each of these agencies, and the composite total. Some of the governments’ hotel taxes are on gross receipts, while some are applied to net receipts, or the base charges paid by hotel guests.
The Civic Federation publishes an annual report on consumer taxes in the City of Chicago, which will be updated in early 2019 with the changes in consumer taxes this year including the new 2.0% home sharing surcharge. For more information on the hotel tax and other Chicago taxes, see the Civic Federation’s latest consumer taxes report.