Transit Tax Legislation Passes House & Senate

Both the House and Senate voted to accept the Governor's amendatory veto of HB 656, the legislation designed to provide permanent funding for the metropolitan area transit authorities.  The legislation, which passed the House with a vote of 61-47 and the Senate 32-19, provides the City of Chicago with the authority to increase home rule real estate taxes and authorizes the RTA to increase sales and use taxes in the RTA region.  Per the Governor's amendatory veto, seniors over age 65 will be able to ride metropolitan mass transit free-of-charge.   

Home Rule Real Estate Transfer Taxes:

HB 656 provides that home rule municipalities with a population in excess of 1,000,000 (only Chicago) may increase the rate of an existing real estate transfer tax or impose a new real estate transfer tax at a rate of up to $1.50 for each $500 of value or fraction thereof, on either the buyer or seller or jointly and severally on both, for the sole purpose of providing financial assistance to the Chicago Transit Authority.  All funds collected from the supplemental tax go directly to the CTA after costs of collection.  Chicago is required to file monthly reports with the Illinois Department of Revenue detailing the amounts transferred to the CTA.   (P.55, HB 656 enrolled version)

RTA Retailers' Occupation Tax Increase:

The Regional Transportation Authority is given the authority to impose an increased sales tax in the metropolitan transit area.  Specifically, the RTA is given the authority to increase the sales tax (retailers' occupation tax, service occupation tax and use tax) in Cook County by one quarter of one percent, which will make the sales tax rate on food and drugs go from 1% to 1.25% and on all other merchandise from 0.75% to 1%.  In DuPage, Kane, Lake, McHenry and Will Counties, the sales tax rate is increased a half percent from 0.25% to 0.75% on all taxable sales.

In the collar counties-- where a half percent rate increase is authorized-- the legislation provides that half of the tax receipts are to be distributed to the RTA and half are to be distributed to the County for use for transportation or public safety needs in the County. (P.167, HB 656 enrolled version)

Combined Tax Rates Vary:

The RTA sales taxes apply to all retail sales made in the metropolitan 6 county RTA region--whether the sale is made within a specific municipality or outside a municipality in a county area.  To determine the impact of the HB 656 increase on municipal sales tax rates, you must add the increased percentage (0.25% for Cook County, 0.50% to DuPage, Kane, Lake, McHenry and Will counties) to existing municipal sales tax rates.  While there are too many municipalities to list, the following chart shows the impact of the rate increase on RTA county sales tax rates. 

Summary of ROT/SOT/UT Rate Increases by County

                            General                          Qualifying                     Reg'd & Titled

                            Merchandise                 Food & Drugs             Vehicles

Cook Co.         7.75% to 8.00%          2.00% to 2.25%          7.00% to 7.25%

DuPage Co.    6.75% to 7.25%          1.25% to 1.75%          6.75% to 7.25%

Kane Co.         6.50% to 7.00%          1.25% to 1.75%          6.50% to 7.00%

Lake Co.          6.50% to 7.00%          1.25% to 1.75%          6.50% to 7.00%

McHenry Co.   6.50% to 7.00%          1.25% to 1.75%          6.50% to 7.00%

Will Co.            6.50% to 7.00%          1.25% to 1.75%          6.50% to 7.00%

Effective Date:

Although HB 656 has an immediate effective date, in order for the above-mentioned tax increases to become effective there will need to be additional action taken by the Chicago City Council (to increase the real estate transfer tax) and by the Regional Transportation Authority to (increase the regional sales, service and use taxes). 

To view the enrolled version of HB 656, click here.

To view the Governor's amendatory veto message, go here.