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Chicago increases PPLTT rate to 15%, impacting SaaS and cloud providers

Chicago has approved a significant increase to its Personal Property Lease Transaction Tax. The PPLTT rate rises from 11% to 15%. SaaS companies and other digital service providers must update the rate they charge Chicago customers immediately to avoid under-collection.

Alex_Lamachenka_TaxCloud

Written by Alex Lamachenka

Head of DemandGen

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What changed

This follows an earlier increase from 9% to 11% that took effect January 1, 2025.

What is subject to Chicago’s PPLTT

Chicago applies the PPLTT to the lease or rental of personal property used in the city, including:

  • Cloud computing services
  • SaaS platforms
  • Remotely accessed or hosted software
  • Other leased digital property used by Chicago customers

Why Chicago impacts remote sellers

Chicago applies its PPLTT tax based on where the customer uses the service, not where the seller is located.

Because the city is a home-rule jurisdiction, it taxes software, SaaS, and cloud services under the Personal Property Lease Transaction Tax even when Illinois state sales tax does not apply.

As a result, sellers with Chicago-based customers can have city-level tax obligations on software digital services solely due to the customer’s location.

Who this affects

  • SaaS and cloud service providers with Chicago-based customers
  • Remote sellers delivering taxable digital services into Chicago
  • Marketplace facilitators involved in taxable digital transactions
  • Finance, tax, and engineering teams managing address-level tax calculation

Why this matters for sellers

The four-point rate increase creates immediate calculation risk. Sellers that fail to update city-level logic will under-collect beginning January 1, 2026. This risk is amplified for subscription billing, usage-based pricing, and contracts that span the year-end transition.

Next steps for sellers

  • Calculation: Update systems to apply the 15% Chicago PPLTT rate for transactions occurring on or after January 1, 2026.
  • Review: Identify customers with Chicago billing or usage locations.
  • Billing: Confirm recurring invoices reflect the new rate beginning in 2026.

Official Source:

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