Chicago Lease Tax

What's the Chicago Lease Tax?

A lease tax is like a sales tax, but instead of applying to items you purchase, like clothes and electronics, the lease tax applies to software accessed through cloud services. As of January 1, 2016, the city of Chicago has imposed a Lease Tax on Chicago customers who use cloud-based software.

Do I have to pay this tax?

Chicago customers are required to pay this tax.

How did Highrise decide if I am a Chicago customer?

We used Chicago-area billing zip codes to determine who should be charged the tax.

How does Highrise calculate this tax?

Highrise is using the City of Chicago required rate of 5.25% to calculate the tax. So, if your monthly invoice is for $49, the tax is ($49 x .0525) or $2.57. The total due would be ($49 + 2.57) or $51.57.

What should I do if I don't live in Chicago or should otherwise be exempt from this tax?

The City of Chicago has provided this information bulletin, which may help you determine if you qualify for an exemption. The legal ruling cites the specific code sections.

If your organization is a non profit, please contact us to provide a copy of your Illinois state sales tax exemption letter, and confirm you use Highrise in connection with your non profit purpose/activity.

There is a new small business application for exemptions. If you believe you should be exempt, please contact us and we will assist you.

When does this tax start?

Highrise is required to collect this tax starting on January 1, 2016. If you are a Chicago customer, you will see a separate line item on your invoice.

Will other companies charge this tax?

Yes, all cloud-based software companies with customers in Chicago will be required to collect this tax from their customers.

What does Highrise do with the tax it collects?

Highrise remits all of the taxes it collects directly to the City of Chicago.