Mid-Year Revenue Report
How the new revenue sources in Chicago's 2026 budget are performing against projections, through July.
A Report By Liz Potamites, Julie Dworkin, and Ishan Daya
Over the course of the last 6 months, the City of Chicago unrolled a series of revenue changes passed last year to balance the FY 2026 budget for city services as well as to pay for an advance on the City's pension payments. The changes include adjustments to existing revenue sources as well as brand new revenue streams.
This report is meant to illuminate how each of those revenue sources, that are material, have performed over the course of the first half of the year, with some data going through July. We will outline which have over and underperformed and with a layering of why that may be the case. The hope is that this report can provide information so that realistic projections can be crafted for next year's budget that are based on real data.
At a glance
Nine revenue sources, measured against the budget
Each card shows what the city has collected against what it budgeted for the same period. Select a card to jump to that section.
SMART Tax
Ahead+57% — on track for nearly $50M in year one
Personal Property Lease Tax
Ahead+2% — the largest line in this report
Online Sports Wagering Tax
Ahead+69% — new in 2026 under the Amusement Tax
Shopping Bag Tax
Ahead+13% – but the revenue includes 2026 one-time collections of retailer catch-up payments from ’16–’23
Liquor Tax
Behind−41% — the shift to price-based taxation is cutting revenue due to percentage chosen
Fines, Forfeitures, and Penalties
Behind−40% — 60% of budgeted revenue; the debt sale has not gone through
Augmented Reality Advertising
No revenue yetRFP was scheduled to be released in August
Advertising on City Assets
No revenue yetRFI complete; RFP expected September 2026
Video Gaming Terminals
Not yet licensedCity licensing process not yet released; 39 establishments state-approved
Bars show actual collections; the marker shows the budgeted figure for the same period. Figures from FOIA requests, the July revenue report, and the 2026 city budget, as cited in each section.
Interactive
Budgeted vs. actual, month by month
The three sources with monthly budget targets on record. Hover or tap a month for its figures; switch to cumulative to see the year-to-date gap.
SMART Tax
Monthly collections against the budgeted figure, January to July 2026.
01 — Revenue Source
SMART (Social Media Accountability & Responsibility Tax) Tax
The SMART Tax had a projected $31M in the budget. To note — it was outlined as a new revenue item that is not being used to balance the budget. This revenue source is collected into the "Protecting CARE" Fund — which will be used for the expansion of public mental health centers and non-police crisis response (CARE), once pending litigation has been completed. Because there is pending litigation on these funds, they are at risk of being returned to the social media companies if the City loses this case.
This tax mechanism (the Amusement Tax) has previously been litigated by industry interest groups like those defending Apple, but those interest groups ultimately lost after years of legal battle.
The SMART Tax is a first-of-its-kind tax in the nation that takes the mechanism of the Amusement Tax to require social media companies to pay a per-month-per-user fee for every user they have registered to the city. This tax was originally proposed by the Institute for the Public Good in Spring 2025, to then be ultimately adapted into the city budget in December 2026. The structure of this tax is a $0.50/pp/mo fee for every social media company with greater than 100,000 users. It uniquely does not allow for the passing down of cost to the user, given users have 'free use' of the platform.
- Microsoft
- Meta
- Twitch
- SNAP
- TikTok
- BD TikTok USA
- Nextdoor
Including, but not limited to:
- X (Twitter)
- Yelp
In the first seven months of this year, the city has garnered $28.7M of revenue, compared to the projected $18.2M projected. It is on track to achieve nearly $50M of revenue in Y1 to go towards the "Protecting CARE" Fund.
| Month | Budgeted (millions $) | Actual (millions $) |
|---|---|---|
| January | 2.6 | 4.4 |
| February | 2.6 | 3.9 |
| March | 2.6 | 4.1 |
| April | 2.6 | 4.1 |
| May | 2.6 | 4.1 |
| June | 2.6 | 4.0 |
| July | 2.6 | 4.1 |
| January to July | 18.1 | 28.5 |
02 — Revenue Source
Personal Property Lease Tax
The Personal Property Lease Transaction Tax, or PPLT, is a tax on all leases, inclusive of paid subscriptions that require a corporation to take a non-possessory lease of a [user's] computer to input, modify, or retrieve data supplied by the customer, such as software platforms like Salesforce, Google Suite, Photoshop. There are currently approximately 5,990 entities that pay this transaction tax.
| Year | Rate |
|---|---|
| 2016 | 5.25% / 9% |
| 2020 | 7.25% / 9% |
| 2021 | 9% |
| 2025 | 11% |
| 2026 | 15% |
Year-to-date, the PPLT has raised $617M through July, against a mid-year budgeted figure of $605M. Financial estimates for 2026 projected that this line-item would raise ~$1.2Bn of revenue.
| Month | Budgeted (millions $) | Actual (millions $) |
|---|---|---|
| January | 0 | 0 |
| February | 104.7 | 108.1 |
| March | 77.1 | 93.8 |
| April | 86.9 | 104.5 |
| May | 93.3 | 104.2 |
| June | 89.4 | 95.4 |
| July | 153.8 | 111.2 |
| January to July | 605.2 | 617.2 |
03 — Revenue Source
Online Sports Wagering Tax
The Online Sports Wagering Tax was a new tax implemented in 2026, within the framework of the Amusement tax. It is a 10.25% tax on the adjusted gross sports wagering receipts from wagers placed within the city limits — inclusive of those placed on mobile applications.
Financial estimates for 2026 projected that this would garner ~$26.2M. As of the end of July 2026, this tax has raised 20.9M — approximately 69% ahead.
| Month | Budgeted (millions $) | Actual (millions $) |
|---|---|---|
| January | 0 | 0 |
| February | 2.3 | 3.7 |
| March | 1.9 | 3.3 |
| April | 2.4 | 3.8 |
| May | 2.1 | 4.0 |
| June | 1.9 | 3.4 |
| July | 1.6 | 2.6 |
| January to July | 12.4 | 20.9 |
One thing to note about this revenue source is that there is pending litigation regarding whether local governments have the right to add their own tax on top of existing state taxes on online betting. There is also pending legislation in Springfield that would specifically ban local governments from imposing this type of tax.
04 — Revenue Source
Shopping Bag Tax
The 2026 budget increased the bag tax from 10 cents to 15 cents. The city receives 14 cents per plastic bag used, while retailers retain 1 cent. The budget estimated $38.2 million in revenue, equivalent to approximately 272 million bags. This projection assumed that bag usage would decline from 2025 levels in response to the higher tax.
However, calculating exact bag usage based on revenue is complicated by the fact that some retailers are required to make catch-up payments. This revenue is recorded when the payment is received, rather than when the bags were actually used. Notably, in June 2026, the city received two large settlements related to bag usage from 2016 through 2023. As a result, as of July 2026, the city had collected $20.2 million, exceeding the $17.9 million projected for that period. For purposes of estimating revenue associated with bag usage during the period, our table uses the original data from the June monthly report rather than the updated data in the July report. This results in an estimated $15.8 million in revenue from January through July, excluding the non-recurring settlements.
Historically, the city has underestimated bag tax revenue, and bag usage has remained relatively stable or even increased following previous tax increases. Based on tax returns supplied by the Department of Finance, 120 million bags were used in the second half of 2024, when the bag tax was 7 cents, compared with 123 million bags in the second half of 2025, when the tax was 10 cents per bag. In 2026, however, taxable bag usage declined modestly following the increase to 15 cents: 111 million bags were reported in the first half of 2025, compared with 108 million in the first half of 2026.
| Year | Budgeted (millions $) | Actual (millions $) | Budgeted # of bags (millions) | Estimated # of bags based on revenue (millions) |
|---|---|---|---|---|
| 2023 (7 cents) | 8.1 | 15.3 | 135 | 255 |
| 2024 (7 cents) | 10.1 | 22.3 | 168 | 372 |
| 2025 (10 cents) | 23.0 | 25.6 | 255 | 285 |
| 2026 (15 cents) | 38.2 | — | 272 | — |
| Jan to July 2026 | 17.9 | 15.8 (excluding estimated June settlements for past years) | 128 | 113 |
05 — Revenue Source
Liquor Tax
Beginning in March 2026, the city shifted the taxation of off-premise liquor sales from a volume-based model to a price-based model. The by-volume rate had remained unchanged since 2008. Coupled with declining alcohol consumption, this has led to shrinking tax revenues. While a shift to price-based taxation had been discussed previously, it was only implemented in the 2026 budget for off-premise sales. The new 1.5% rate is lower than the 2.38% average rate generated by the previous volume-based tax (COFA Revenue Resource: Liquor Tax). For example, under the new regime, the city collects more revenue only on six-packs of beer priced above $10.99 (2026 July 16 — Committee on Budget and Government Operations hearing). Preliminary data suggests that OBM's projection that this shift would result in lower revenue is proving accurate. As of July 2026, the city had collected $9.7 million, significantly below the $16.4 million projected for the first 7 months of the year.
| Year | Budgeted (millions $) | Actual (millions $) |
|---|---|---|
| 2023 | 32.4 | 30.1 |
| 2024 | 31.3 | 29.7 |
| 2025 | 30.0 | 28.1 |
| 2026 | 34.6 | — |
| Jan to July 2026 | 16.4 | 9.7 |
Historically the city has collected less than estimated from the liquor tax but this misestimation appears to be drastically increasing this year.
06 — Revenue Source
Augmented Reality Advertising
The budget relies on $6 million in revenue from a new concept for virtual advertising on city property. The idea is for the city to sell the rights to companies that want to project images onto city owned property that can only be seen through glasses or a cellphone similar to Pokemon Go.
The city describes the opportunity in its Request for Information this way:
"Augmented reality refers to digital content layered onto real-world locations and typically accessed through mobile devices. Unlike traditional out-of-home advertising, this program would be digital in nature and would not require the installation of physical infrastructure."
In order to implement this new revenue stream the city released two RFIs to which it got two responses. It used the responses plus additional research to craft an RFP that (was released) in August.
One of the responses was from MagellanXR, a new Florida-based company started for exactly this type of AR installation. MagellanXR has offered to serve as a content creator with the city working to vet, develop, and implement proposals for Augmented Reality experiences involving city assets. While the business is new, the technology they use has been used broadly in the past and the owners have experience in AR and VR usage in military training. Their response to the RFI lays out a path forward for the city to implement this plan and seems to address potential concerns and liabilities that the city asked about.
The Building Owners and Managers Association (BOMA) was the second respondent to the RFI and was an original advocate of this idea as they had been researching the concept as a revenue option for their members. A model they have proposed for implementation involves partnering with a brokerage firm that would bring prospective advertisers to the table and charge a brokerage fee for arranging the relationship. This model would avoid a procurement process as it would not need to be exclusive to any one firm. The opportunity to broker deals would be an open one.
The city could put in place a framework that would outline how the program would work, what properties would be off limits, what content would be off limits, and how to schedule hours for the activation and manage crowds. BOMA has been in conversations with a particular broker that has indicated that it plans to present the city with a proposal that the broker believes could generate the expected $6 million in Q4 of 2026. To date there has been no revenue generated from this revenue stream.
Although there has yet to be an example of AR advertising as a revenue generator for cities, some cities have started using AR in cultural contexts and public engagement contexts. These AR experiences are free for users, don't use advertisers, and may actually cost the cities money, but they demonstrate the types of ways that AR can be used. Atlanta has a public art walk in a city park that utilizes AR technology to help viewers learn about the art. New York has used AR as a way for people to visualize and engage with new developments and as a learning tool to educate people about city infrastructure.
07 — Revenue Source
Fines and Penalties
One source of revenue in the city budget each year is Fines, Forfeitures, and Penalties. The Office of Management and Budget defines that category in this way:
Fines, Forfeitures, and Penalties: Fines and any associated penalties levied for violations of the Municipal Code. The primary source of this type of revenue is from parking tickets. Also included in this category are red-light and automated speed enforcement fines, moving violations, booting-related fees, sanitation code violations, and housing court fines.
In Fiscal Year 2025, the city budgeted $345,214,000 and collected $327,322,000 (95%). The mayor's introduced budget for 2026 included $389,067,969, a 12.7% increase from the previous year. The final 2026 budget included $481,667,969, a $92,600,000 increase from the proposed budget. This increase was based on a plan to sell off $1 billion in older, unpaid, debt for .09 on the dollar to a private entity that would be empowered to collect the debt. As of July 31, 2026 the amount collected is at only 39% of passed revenue and 60% of budgeted revenue due to the debt sale not going through to date.
The Office of Budget and Management evaluated the opportunities for collecting outstanding debt and determined that selling debt related to properties could interfere with productive redevelopment of the sites as well as limit the city's ability to create accountability with bad landlords with a long-standing track record of negligence. The debt sales that were most viable to pursue were vehicle debt including parking tickets, red light tickets, and speed enforcement tickets. According to OBM, 75% of these fines are collected within the first 3 years and older debt collection is not often successful, so the city would be not giving up dollars that they were likely to collect.
The city issued an RFP on April 7, 2026 to identify an intermediary for the debt sale. Two responses were submitted after the RFP was sent to more than 20 investment banks and was downloaded more than 50 times from the city's website.
Bank of America was the top respondent to the RFP and the city initiated conversations regarding the sale, but ultimately was unable to agree on a scope of work. It is unclear why the conversations did not move forward, but challenges that have been raised are lack of precedent for the sale of unsecured vehicular debt, potential legal challenges, and the risk involved with taking on unsecured debt. Conversations are ongoing with the other respondent to the RFP.
08 — Revenue Source (new)
Advertising on City Assets
The 2026 Budget included revenue from a new program for advertising on parking meters, bridge houses, lampposts, and large City vehicles, such as garbage trucks. The FY2026 Management Ordinance directed the Department of Finance to design this framework, and the City's budget anticipated $29.3 million in new revenue from the effort. This target faces significant skepticism from industry experts who argue that adding supply to a mature, supply-balanced market will not create new advertiser demand. During the first half of 2026, the City conducted feasibility reviews, coordinated with multiple departments, and issued a Request for Information (RFI) to test market interest. Five respondents participated, offering a mix of formal proposals and exploratory feedback.
The RFI responses highlight conflicting market theories regarding the City's asset categories. Intersection, a major municipal advertising operator, expressed optimism about expanding assets, specifically lamppost banners, and suggested that digital kiosks and street furniture should be managed as a unified program. Conversely, JCDecaux, the City's longtime street-furniture partner, warned that Chicago's advertising market is mature. They argued that simply adding inventory would likely dilute existing demand and exert downward pressure on prices, rather than generating the projected revenue. JCDecaux further cautioned that small-format assets typically generate limited value and that advertising on historic bridge houses could trigger significant public backlash.
The City has now completed the RFI process and is working to address the enthusiast and cautious feedback received. According to a July 15, 2026, memo from the Acting CFO, the City is currently coordinating with stakeholders—including the Department of Procurement Services (DPS), the Chicago Department of Transportation (CDOT), the Department of Cultural Affairs and Special Events (DCASE), and the Department of Fleet and Facility Management (2FM)—to refine the program framework and asset mix. This inter-departmental effort is needed to finalize the formal Request for Proposals (RFP), which is expected to be released in September 2026. Given this timeline, it is unclear if any revenue will be generated from this program in 2026 but the work done should help the city develop a reasonable estimate of possible revenue in 2027.
09 — Revenue Source
Video Gaming Terminals
The budget relies on $6.8 million in funding from the licensing of new video gaming terminals in Chicago. In order for this funding to be realized, qualified establishments would have to apply to the state for a license and get approval. Then the city would have to stand up its own licensing process and approve applications locally and collect the fees associated with the local license. Those crafting the budget proposal made it clear the money this year would come from city licensing fees and not tax revenue generated by the operation of the terminals. The city has enacted a fee structure for video gaming terminal licenses, but it has not yet finalized or released the licensing process. Here is the fee structure that has been passed by city council:
| Video Gaming (4-155) | Fee |
|---|---|
| Location License | $500.00, plus $1,000.00 per video gaming terminal |
| Terminal License | $500.00, plus $1,000.00 per video gaming terminal |
For each location that wants to operate video gaming, they would have to have a location license ($500) plus a license ($1,000) for each terminal at that location. The city ordinance allows for a maximum of six terminals per location. In addition, the terminals would have to be operated by a separate licensed terminal operator. This operator also needs to obtain a license for each terminal ($1,000). So for each location, there would be a minimum licensing fee collected of $2,500 for one terminal and it would increase by $2,000 for each additional terminal. The separate terminal operator would also have to pay a $500 license fee that will generate some additional income but it is unclear how many would be providing terminals for Chicago establishments. There are currently 100 licensed terminal operators in Illinois and 14 pending licenses. Sixty-three of the licensed operators are currently operating terminals in establishments. If all 63 currently operating terminal operators were licensed in Chicago, that would generate $31,000.
As of July 28, 320 Chicago establishments have applied for a state license and 39 have been approved. Here is what revenue could look like this year if every applicant that applied gets approved or if only the approved establishments to date pay the fee.
| Establishments Licensed | 6 (max allowed) terminals per establishment | 1 terminal (minimum) per establishment |
|---|---|---|
| Revenue if all 320 Applicants are approved and licensed by the city | $4,000,000 | $800,000 |
| Revenue if 39 already approved establishments are licensed by the city | $487,500 | $97,500 |
License fee calculator
Explore how many establishments, and how many terminals each, it would take to reach the $6.8 million budgeted. Uses the fee schedule passed by city council: $500 per location, plus $1,000 per terminal for the location and $1,000 per terminal for the operator.
It should be noted that the original estimate of $6.8 million was based on 80% of eligible applicants applying and being approved or 2,640 total locations approved. This equals only $2,575 per location which is one terminal per location. Drafters of the budget proposal seemed to be assuming the low end of the above estimates.
Factors that will impact the above revenue estimates are the amount of time it takes to approve licenses and a potential lawsuit from Bally's—the city's one licensed casino. The Illinois gaming board meets monthly to approve applications. Application approval time depends on if there are any mistakes in the application, ownership structure, and number of criminal background checks7. Current approved applicants have waited on average 127 days for approval, but that is a best case scenario as half of the ones on the pending list have already been waiting for longer than that and the average wait time for current pending applications is 125 days.
Another complicating factor is that Bally's, the licensed casino in Chicago, had an agreement with the city that it could renegotiate its $2 million annual payment to the city if the city legalizes video gaming. Now Bally's is threatening legal action8 and potentially to reopen the whole contract. They have also paused construction9 on the casino which adds additional pressure and has a resulted in a back and forth with City Council about what Bally's can legally do10. If Bally's is successful in renegotiating any of the terms, there could be a loss of revenue that offsets new income from terminal licensing. In addition, competition from gaming terminals could mean less overall revenue coming in from the Bally's casino which is taxed at a rate that would deliver more money to the city than the video gaming terminals (23.2% for the casino vs 5.15% for VGTs11). There is a pending ordinance introduced by the mayor that has not been voted on which would repeal the ordinance12 that made video gaming legal in Chicago and also pending ordinances that would ban video gaming in six wards.
10 — Conclusion
Real data for next year's projections
Last year's budget debate was quite contentious as opponents of the proposed employer expense tax and those who wanted to see an increased contribution to city pensions, looked to find alternative revenue solutions and landed on ones that had not been previously tested. Now that we are six months into implementing the new revenue proposals, there is additional data and information on which to make next year's projections. The hope is that this report can provide information so that realistic projections can be crafted for next year's budget that are based on real data.
References
Sources
- City Clerk of Chicago, ordinance O2024-0013682 (2025 introduced budget). chicityclerk.s3.us-west-2.amazonaws.com
- City of Chicago, 2026 Budget Recommendation Book. chicago.gov
- City of Chicago, 2025 Comprehensive Annual Financial Statements. chicago.gov
- City of Chicago, 2026 Budget Recommendation Book. chicago.gov
- City of Chicago, FY2026 Annual Appropriation Ordinance. chicago.gov
- City of Chicago Office of Budget and Management, Budget Publications (monthly revenue reports). chicago.gov
- Accel Entertainment — "How long does it take to get approved for a gaming license." accelentertainment.com
- Crain's Chicago Business — Bally's casino and City Council, May 24, 2026. chicagobusiness.com
- Crain's Chicago Business — Bally's casino slowdown, August 10, 2026. chicagobusiness.com
- Crain's Chicago Business — Bally's Chicago casino delay and video gambling, August 25, 2026. chicagobusiness.com
- Chicago Tribune editorial — Bally's casino, video gaming terminals, and the contract dispute, June 24, 2026. chicagotribune.com
- WTTW News — "State approves 1st video gambling licenses in Chicago; mayor asks City Council to reverse," June 12, 2026. news.wttw.com
Additional sources cited in the text: Hollywood Reporter (Apple settlement with Chicago over the streaming tax); Chicago Office of Financial Analysis, Revenue Resource: Liquor Tax; Committee on Budget and Government Operations hearing, July 16, 2026; CBS News Atlanta (College Park ARTrail); NYC Testbed (AR-based public engagement); New York Hall of Science (citywide AR experience); Municipal Code of Chicago, Chapter 4-155. Monthly budgeted and actual figures throughout are from FOIA requests, the July monthly revenue report, the ACFR, and the 2026 city budget.
If you have additional questions on this report, please reach out to comms@i4pg.org.