What are the impact of Chicago’s Parking Taxes?

Three taxes are applied to parking revenues in the City of Chicago

Parking owners and operators pay three taxes on parking revenues generated in the City of Chicago. The total tax ranges from 35.25% to 41.25%.

Transient Parking Less than 24 hours

Transient Parking Greater than 24 hours

Monthly Parking

City of Chicago

23.25%

Cook County

6.00%

9.00%

State of Illinois

6.00%

9.00%

Total

35.25%

38.25%

41.25%

Chicago’s total parking taxes have increased over time

Chicago’s parking taxes have increased significantly over time. Since the Illinois parking excise tax was introduced, total transient parking tax rates have increased from 26.00% to 35.25%. Total monthly parking taxes have increased from 31.00% to 41.25%.

City of Chicago: Parking Tax – The City of Chicago Parking tax increased January 1, 2025 from 20% to 22% to 23.25% for all types of parking.
Cook County: Parking Lot & Garage Operation Tax – In September 2013, Cook County simplified the tax structure and changed it from a tiered structure to a percentage structure.
State of Illinois: Parking Excise Tax – The State of Illinois parking excise was introduced January 1, 2020.

What is the impact to real estate owners, parking operators and parkers?

Real estate owners net less net revenue

Investors that own parking garages and surface lots pay the City, County and State a significant amount of taxes.

Example 1

Monthly Parking Revenue

If an owner collects $250 of monthly parking revenue…

Revenue Collected

$250.00

–

Taxes Paid

($73.01)

Net to Owner

$176.99

Example 2

Transient Parking Revenue

If an owner collects $45 of transient revenue…

Revenue Collected

$45.00

–

Taxes Paid

($11.73)

Net to Owner

$33.27

Parking operators must navigate a complex tax situation

Parking operators must constantly evaluate the tax landscape and how each taxing authority interprets how the parking tax is applied. There are a number of edge cases that include resident parking, valet storage and online sales that could be treated differently by the City of Chicago, Cook County and State of Illinois.

In addition, parking operators are audited by the three taxing authorities and have to dedicate resources and time to responding to audits.

Parkers pay higher prices

The high tax rates result in higher parking rates. Real estate owners try to pass parking tax increases to parkers; however, this is challenging because of the amount of parking supply in Chicago and high parking rates.

Parking Advisors’ recommendations for real estate investors

Parking Advisors recommends:

Leverage Parking Advisors’ acquisition services to properly calculate and forecast parking taxes
Hire a parking operator to help ensure parking taxes are paid correctly and avoid time-consuming tax audits
Monitor the City of Chicago, Cook County and State of Illinois’ budget discussions to understand if parking tax increases are proposed