CHICAGO, October 23, 2026 – Mayor Brandon Johnson is seeking more money from Chicago’s largest employers. The mayor’s 2027 budget, released Wednesday at City Hall, seeks to reintroduce a $25-per-employee monthly tax on businesses that employ more than 125 employees, a plan which was voted down by aldermen less than a year ago.
The mayor refers to the plan as an “equitable employer tax,” but opponents have called it a “head tax.” It forms the cornerstone of the mayor’s strategy to close an $882 million budget deficit without raising property taxes, slashing services or cutting jobs.
The money behind the plan
Here’s the arithmetic. The corporate tax would be levied against less than 3% of businesses in Chicago and would net an estimated $100 million per year. Businesses whose employees operate in socioeconomically distressed areas designated by federal law, much of the city’s South and West sides, would get credits covering the tax paid by their employees. The carveout is meant by Johnson’s office to encourage companies to hire in parts of the city long in need of large employers.
But the head tax alone is far from sufficient to fill the gap. In addition, Johnson wants to boost the personal property lease tax rate from 15% to 20%. That would target cloud computing software and other technology and raise an estimated $234 million. Vehicle leases would remain at 15%, but the rate on film production equipment and facilities would be reduced to 11%.
There’s a proposed 20% tax on online sports betting, an estimated $37 million revenue source; $18 million from cameras that ticket drivers blocking bus and bike lanes; and a packaging waste tax at 15 cents, estimated at $9 million. Overall, the plan taxes corporations, sports bettors, drivers, and customers of carryout food far more than homeowners.
Borrowing for lawsuits
And then there is the awkward part. Johnson advocates taking on a loan of $481 million to pay police misconduct settlements that include $260.8 million due to 17 men who were in jail for more than 383 years following forced confessions related to former Detective Reynaldo Guevara. These payments will be spread over four payments in 2027 and 2028.
According to Johnson, in September he said that the city would not borrow for such purposes. However, now his administration argues that borrowing will give “a little bit of breathing room” and this debt will be paid off in five to seven years.
This is an understandable decision in some sense since the settlement of legitimate claims can save money on lawyers. However, it is also the second year when the city would take loans for its current expenses. As an example, the amount of such borrowing in 2026 was $267 million to pay police settlements out of $433.3 million total borrowing. The city has been downgraded three times by credit rating agencies under Johnson’s governance.
A familiar Council fight
So will it pass? Honestly, chances don’t seem great. In last year’s budget, 29 aldermen from the City Council Budget Accountability Coalition told Johnson that they would not support a head tax or a tax that will increase the cost of businesses that employ people in Chicago. Alderman Bill Conway of the 34th ward described the proposal as being “dead on arrival” following Johnson’s speech on Wednesday.
Johnson requires 26 votes – or 25 if he is prepared to break a tie. He seems not to have enough of them. Ald. Nicole Lee, who represents the 11th ward, described the tax as mostly a political message rather than a governance move, while Ald. Andre Vasquez, who voted against the last year’s budget alternative, believes that things will get tougher.
Johnson won’t budge. “There is no reason to coddle or feel sorry for corporations. They are doing just fine,” Johnson said, noting that big corporations owe something to a city where their success takes place.
What comes next
This proposal bears the title “fair share budget” in reference to the 1986 budget by former Mayor Harold Washington. Moreover, it allocates $364 million for additional pension payments, apart from the obligatory $2.94 billion pension payment, while proclaiming $525 million surplus in TIF and $285 million to Chicago Public Schools.
The Budget Committee of the City Council will interrogate department chiefs over the next three weeks. Aldermen have to approve the budget before the end of the year. And if the head tax proposal does not make it through again, Johnson will be forced to confront the same question he avoided last year— what, exactly, fills the gap?
