Mayor Johnson Reveals 2026 Chicago Budget Proposal

In October, Mayor Brandon Johnson introduced his $16.6 billion 2026 budget. This proposal is still subject to negotiation with City Council, and department hearings are currently underway. A property tax increase is not a part of this year's budget; however, the proposal attempts to close a more than $1 billion budget gap through cuts and efficiencies and over $500 million in new taxes and fees, largely targeting the business community. These include reinstituting a corporate head tax of $21 per employee per month applied to businesses that have over 100 full-time employees who spend at least 50% of their working time in the city, increasing the online sports wagering tax to 10.25%, increasing in the cloud computing tax to 14%, instituting a $2 per unit cannabis tax, instituting a first of its kind social media tax, increasing the ground transportation tax to 10.25%, and increasing the boat mooring tax to 23.25%. The budget also declares a TIF surplus, allowing the city to distribute approximately $1 billion to local taxing bodies. Other non-tax revenue is proposed to increase by 1.2% ($20.4 million) from the FY 2025 budget. While the exact dollar amounts are unclear, this non-tax category includes increases for building permits, business licenses, certificates of occupancy, inspection fees, building code violations, and an increase in the fees for vacant building registration among other categories.

Housing issues have long been front and center at City Hall and this budget

proposal identifies making Chicago the most affordable big city in America as a central goal. To achieve this, the proposal outlines strategies that include:

• Building more homes through continued investment from the Housing and Economic Development Bond;
• Investing $135 million to create environmentally sustainable affordable housing through the green social housing program approved earlier this year;
• Preventing gentrification by expanding tenant protections;
• Preventing and ending homelessness by investing $5.1 million to permanently fund the Rapid Rehousing Program.

Below are current appropriation summaries for the most consequential city departments for housing providers. 

Department of Housing 

In this budget, the Department of Housing will see a 29.9% ($68.7 million) reduction in appropriations from last year. Department of Housing policy initiatives for 2026 reflected in the budget include: 

• Implement the next Five-Year Housing Plan.
• Launch the Green Social Housing development program.
• Complete the final acquisition and rehabilitation projects for selected grantees in the non-congregate shelter acquisition program.
• Implement the 2025 Qualified Allocation Plan (QAP) and the 2025 Architectural Technical Standards Manual (ATSM).
• Initiate construction on new developments through the Green Social Housing development program.
• Investment of $40 million in bond funds to support long term recovery from storm damage in 2023 and 2024 for the Flood Repair Program to provide flood mitigation and prevention repairs for up to 1,600 residents in impacted communities.

Department of Planning and Development 

The Department of Planning and Development will see an 8.5% ($11.3 million) reduction in appropriations from 2025. Department of Planning and Development policy initiatives for 2026 reflected in the budget include:

• Finalize a 20-year update to the Calumet Area Land Use Plan and Design Guidelines and initiate a new industrial corridor planning study.
• Close on the sales of more than 50 Missing Middle lot listings in Chatham, South Chicago and Morgan Park and make at least 75 additional lots available for Missing Middle housing construction in other West and South Side neighborhoods.
• Award at least $60 million in medium and large capital improvement grants to at least 30 organizations and pre-development grants to at least 15 nascent projects.
• Award at least $110 million in small capital improvement grants to at least 400 small businesses and organizations.
• Implement the Commercial Corridor Storefront Activation Program through pending partnerships with up to 10 business organizations.
• Invest $5 million in CDBG-DR funds for construction of five to six Permeable Outdoor Plazas (POP!).

Department of Buildings 

Appropriations for the Department of Buildings will see a .8% ($336,074) reduction from 2025. Department of Buildings policy initiatives for 2026 reflected in the budget include: 

• Continuing with the modernization of the Chicago Construction Code, updating the mechanical code provisions, and extending the residential high-rise mechanical ventilation pilot program to support the conversion of high-rise buildings into residential units.
• Transitioning to a new permitting and inspection system that will result in enhancements to the department's processes online and provide real time feedback and tracking for ongoing projects.
• Using an ordinance change eliminating the barrier to City debt to continue the department's mission of community reinvestment through the forfeiture program. This program will be instrumental to developing communities and promoting rehabilitation of vacant buildings to support the department's efforts to address blight, reestablish community pride, and reduce criminal activity in neglected buildings prone to hazardous conditions.