Mayor Johnson Unveils 2026 Budget

Chicago Mayor Brandon Johnson released his third proposal for Chicago’s budget plan for the 2026 fiscal year. Titled the “Protecting Chicago Budget,” the motion outlines his office’s plan to balance community investment and fiscal responsibility. The plan was unveiled by Johnson to City Council Oct. 16.

The main focus of the plan’s goal to protect Chicago is to alleviate previous financial stress while simultaneously responding to federal funding policies, which Johnson described to be at a crossroads with the city. Currently, the city is experiencing a $146 million 2025 budget deficit, looming corporate tax shortfalls and pension obligations. 

Johnson argues his plan will reflect a shift towards bringing stability to Chicago by focusing on initiatives at the neighborhood level.

The proposal focuses on six main priorities — public safety, affordability, youth investment, economic growth, environmental protection and maintaining an equitable balance. Johnson explained how the theme of protection reflects a pushback against federal financial trends driven by the Trump administration.

One of the most prominent proposed reforms is a $1 billion Tax Increment Financing surplus, which would be the largest in Chicago’s history. The surplus’s intention is to help fund Chicago Public Schools, Park District programs and libraries by reinvesting unspent development funds back into such public institutions.

Further playing into his message of “corporate accountability,” Johnson’s plan to tax large social media and tech companies operating in Chicago through what was described as a Social Media Amusement and Responsibility Tax. 

The tax would cost large social media platforms 50 cents for each active user within the city of Chicago. To ensure smaller or local networks aren’t impacted by the tax, the measure will only apply if a given platform has over 10,000 active users. Johnson’s office predicts the tax will generate an annual income of $31 million to fund free mental health clinics and crisis response teams with specific emphasis towards youth mental health issues.

If approved, Chicago will become the first major U.S. city to tax social media companies directly for local mental health initiatives, setting a precedent on how cities address the intersection of technology regulation and mental health.

The proposal also wants to expand youth diversity programs, job opportunities and support domestic and gender based violence survivors with a Community Safety Fund of $100 million. A 3% tax on large corporations would support the fund. 

Such a fund reflects the long-standing promise made by Johnson’s campaign to shift away from a dependence on traditional police enforcement and instead focus on prevention efforts to reduce crime rates according to his campaign website.

This tax signifies Johnson’s attempt to distance his administration from previous mayors who heavily relied on downtown development through corporate subsidies — a strategy he described as asking “the ultra-rich to put more skin in the game” during a live interview with CBS News Chicago.

Johnson proposed a head tax on all companies with 100 or more full-time employees who spend 50% of their time working in Chicago. The tax, called the Community Safety Surcharge, is projected to affect 3% of Chicago businesses and would charge those businesses $21 per employee per month. 

Chicago had a corporate head tax from 1974 to 2014 when it was repealed by then Mayor Rahm Emanuel. Johnson proposed reinstating the head tax when running for Mayor in 2023, according to his website.

Several cost-of-living protections for residents were also included in the plan. Promises in the proposal include an abolishment of property taxes, the city’s grocery tax and a reduction in the motor vehicle rental tax.

Effective Jan. 1, 2026, Illinois will transfer the authority to impose what was originally a statewide 1% tax towards municipalities and counties. Therefore, local governments such as Chicago’s will have the power to determine whether they’d want to implement their own version of the grocery tax. Johnson’s plan suggests removing the tax along with the state to alleviate strain on the working people. 

According to the US Department of Agriculture, grocery taxes impact lower income households more considerably as they spend a larger percentage of their income on groceries. 

Another way Johnson’s plan intends on shifting the tax burden onto wealthier Chicagoans and large corporations is through a Yacht Tax. According to the language in the budget proposal, the tax intended to increase boat-mooring rates towards standards described as those aligned with “historical rates and the rate of parking.”

Currently, the city’s boat mooring tax was 7% of boat mooring or docking fee. It became effective in 2003, where the previous tax beforehand was 25% of the fee. 

The approach sharply contrasts with prior budgets which placed more dependence on service fees and property taxes. Similarly to the proposed corporate taxes, these measures align with Johnson’s message where fiscal recovery should not fall on ordinary residents as they aim to make housing and transportation slightly more manageable. 

The City Council will begin budget hearings in November, with the final vote expected to occur before the Dec. 31 deadline.