As the calendar turned to January 1, Chicago began collecting several new and increased local taxes under its newly adopted $16.6 billion city budget, a measure passed by the City Council in late December after a contentious political battle with Mayor Brandon Johnson. Council members moved forward with a revenue plan after rejecting key elements of the mayor’s original proposal, prompting the revised budget — which includes tax hikes — to take effect with or without the mayor’s signature.

One of the most visible changes for everyday residents is the increase in the checkout bag fee at retail stores. Beginning this year, stores in Chicago will collect or absorb a $0.15 fee for each paper or plastic checkout bag, up from the previous $0.10 fee. That means shoppers will pay more at the register for each bag they take, though customers can avoid the surcharge by bringing reusable bags of their own. Tax professionals note that retailers will remit most of the fee to the city’s revenue department under the updated revenue ordinance.

Alongside the grocery bag fee hike, Chicago’s new sports betting tax also kicked in on January 1. Under the budget ordinance, legal betting operators within the city now face a 10.25 % tax on adjusted gross revenue from wagers placed by Chicago residents. The levy — supported by the City Council as part of its plan to balance the city’s finances — has drawn pushback from major sportsbook operators. Several firms, including DraftKings and FanDuel, sued the city, arguing the local tax may violate state authority over betting regulation and could jeopardize online wagering operations. While companies withdrew an initial request for an emergency injunction, broader legal challenges to the tax are expected to proceed.

These consumer-facing tax changes are part of a broader mix that city officials approved after months of negotiation and public debate. Aldermen stripped out a controversial corporate head tax from the final budget over concerns about its impact on business, choosing instead to rely on a combination of smaller levies — including bag fees and the sports betting tax — to plug a projected budget gap. The resulting fiscal package has divided local leaders but was ultimately enacted to avoid a government shutdown at the start of the new year.

Local analysts say these new taxes are designed both to generate predictable revenue for core services and to spread the burden across different economic activities, though some critics argue they disproportionately affect lower-income residents and could have unintended effects on local commerce. As enforcement begins in 2026, city revenue officials and retailers are adjusting compliance systems and preparing for the first round of collections under the new tax framework.