Alert

Chicago passed the 2026 Revenue Ordinance, which creates a social media amusement tax and requires increases to the personal property lease tax, among other changes effective January 1, 2026.

Background

The Chicago City Council approved the 2026 Revenue Ordinance on December 20, 2025, and the Chicago mayor declined to veto the bill, allowing it to become law without his signature.

The ordinance is effective as of January 1, 2026, and contains changes to the current personal property lease tax, along with creation of a new social media amusement tax, among other changes.

What Is the Social Media Amusement Tax?

Per the ordinance, the purpose of the social media amusement tax is to generate revenue for the City of Chicago “by taxing the activity of social media amusement based on a social media business’s monetization of consumer engagement and consumer data collected about Chicago users in conjunction with their social media use.”

Who Does the Social Media Amusement Tax Impact?

Specifically, the social media tax is imposed on social media businesses that collect consumer data on more than 100,000 Chicago consumers in a calendar year, based on the number of Chicago consumers from whom a social media platform business collects consumer data within a calendar month. The rate of tax is $0.50 for each Chicago consumer per month in excess of 100,000.

The social media business has the burden of proving a consumer is not a Chicago consumer as the rebuttable presumption is that a consumer whose information on record or available to a social media business indicates a Chicago home address, a Chicago mailing address or internet protocol address, or primary usage location connected with a Chicago location is a Chicago consumer.

Notably, the ordinance doesn’t require any additional consumer data to be collected or analyzed by social media businesses beyond its standard practices.

What Counts as a Social Media Business?

A social media business is defined as 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.”

Social media includes websites, applications, products, and internet platforms that allow consumers to engage with images, videos, and audio presented in various formats, including memes, artificial intelligence, and live streams. Social media doesn’t include any bona fide news website, application, or platform.

Notably, the ordinance excludes the following from the definition of social media business:

• Internet service and search providers
• An email service
• A streaming service, online video game, or website where the content is not user generated but includes interactive functions—such as chat or comments—that’s incidental to, or not dependent upon providing the content
• “A communication service, including text, audio, or video communication technology, provided by a business to the business's employees and clients for use in the course of business activities and not for public distribution, except that a social media business’s media access includes a communication service provided to consumers by a social media business”
• An advertising network with the sole function of delivering commercial content
• A telecommunications carrier
• A broadband service
• Single-purpose community groups for education or public safety
• Teleconferencing or video-conferencing services that allow reception and transmission of audio and video signals for real-time communication
• Cloud computing services
• Providing or obtaining technical support for a platform, product, or service

How to Maintain Compliance with the Social Media Amusement Tax

The tax is to be paid monthly by the social media company, due on the 15th of the following month, and tax returns are required to be filed annually. The first tax return period will be January 1, 2026, to June 30, 2026, and will be due on August 17, 2026 as detailed here.

Taxpayers liable for the new social media tax are required to register for the tax with tax return form code 7510S. Even taxpayers who have previously registered for Chicago’s amusement tax must register separately for the social media tax.

Taxpayers who already have an account number with the City of Chicago don’t need to submit the tax registration form; instead, they may submit only the Affidavit for Initial Tax Period form, indicating their City of Chicago account number.

Chicago Personal Property Lease Tax Update

Beginning January 1, 2026, the personal property lease tax increased to 15% of the lease or rental price, up from the prior rate of 11%.

The personal property lease tax is imposed on “(1) the lease or rental in the city of personal property, or (2) the privilege of using in the city personal property that is leased or rented outside the city.”

The ordinance prohibits the rate for this tax to increase before January 1, 2028.

We’re Here to Help

Please reach out to your firm state tax advisor with any questions.

Additional Resources

• State & Local Tax Services