Chicago does not levy a city business income tax. The Business License Tax under MCC 4-4 funds licensing through the Department of Business Affairs and Consumer Protection. Illinois imposes a 7 percent corporate income tax plus the 2.5 percent Personal Property Replacement Tax.
MCC 4-4 establishes Chicago's general business licensing scheme administered by the Department of Business Affairs and Consumer Protection (BACP). The Limited Business License covers most retail and service operations at $250 every two years; specialty licenses for restaurants, taverns, and tobacco retail carry additional fees. Illinois preempts city income taxation: the state imposes a 7 percent corporate income tax under 35 ILCS 5/201 plus a 2.5 percent Personal Property Replacement Tax (1.5 percent for partnerships and S-corps) distributed to local governments including Chicago. Cook County's commercial assessment level is 25 percent of value vs 10 percent residential, producing higher property tax for businesses. Chicago also levies industry-specific taxes on amusement, leases, and bottled water under MCC 3-30 through 3-50.
Operating without a required business license triggers fines of $250-$1,000 per day under MCC 4-4-340, license revocation, and possible misdemeanor charges. State tax violations trigger Illinois Department of Revenue audits and 10-30 percent penalties.
Chicago, IL
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Chicago, IL
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See how Chicago's business tax classification rules stack up against other locations.
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