Illinois Democrats Propose Sweeping New 6.25% Sales Tax on Services to Fund Chicago Transit

Residents Could See Higher Bills on Everything from Car Repairs to Streaming to Doctor Visits.

CHICAGO — In a bold and controversial move, Illinois Democrats are floating a sweeping new 6.25% sales tax on more than 80 everyday services—everything from car repairs and babysitting to pest control, dog grooming, and even visits to the doctor—in an effort to rescue Chicago’s struggling public transit system.

If passed, the new tax plan would mark one of the largest tax expansions in state history, fundamentally reshaping how Illinois raises revenue. Unlike many states, Illinois has long taxed the sale of goods but has largely exempted services. That could change dramatically under the proposed legislation, backed by Democratic leaders and supported by Governor J.B. Pritzker.

The aim? To shore up the finances of the Chicago Transit Authority (CTA) and other regional transit systems, which have been hemorrhaging ridership and revenue since the COVID-19 pandemic. Lawmakers argue that without fresh funding, public transit in Chicago could face massive service cuts, layoffs, and fare hikes.

But the scale and reach of the new tax have sparked immediate backlash from small business owners, working families, and fiscal conservatives.

A Tax for Just About Everything

The proposed tax would apply to a staggering array of services. Among them:

• Auto repairs and car washes
• Home repairs and handyman services
• Landscaping and pest control
• Childcare and babysitting
• Dry cleaning and carpet cleaning
• Fitness centers and personal trainers
• Legal, financial, and investment advice
• Streaming services like Netflix and Spotify
• Even medical services, including doctor visits, dental procedures, and surgeries

Critics say the tax is essentially a broad-based cost of living increase in disguise—one that would disproportionately affect low- and middle-income families already feeling squeezed by inflation and property tax hikes.

“This is a massive expansion of the tax base that hits everyday people hardest,” said Greg Baise, a senior fellow at the Illinois Policy Institute. “You’re not just talking about luxury services. This includes going to the dentist, paying a babysitter, or hiring a plumber in an emergency.”

A Lifeline or a Burden?

Supporters of the tax argue that it’s time Illinois updated its tax system for a 21st-century service economy. While goods consumption has flattened or shifted online, service-based spending continues to rise—and currently escapes the state’s tax net entirely.

“Illinois can’t afford to cling to a tax system built for the 1950s,” said State Sen. Ram Villivalam (D-Chicago), a key sponsor of the proposal. “If we want to keep public transit running, we need sustainable funding. Everyone benefits from a working transit system—even if they don’t ride it.”

Yet even some Democrats are wary. With 2026 elections on the horizon and inflation still a political pain point, some downstate and suburban legislators are balking at the optics—and the economic impact—of a tax that affects so many services used by ordinary families.

Public Transit’s Pandemic Hangover

The proposal comes at a moment of existential crisis for Chicago-area transit. Ridership remains well below pre-pandemic levels. Federal COVID relief funds are drying up. The Regional Transportation Authority (RTA), which oversees CTA, Metra, and Pace, faces a projected $730 million funding gap by 2026.

Transportation advocates say the new service tax is the only politically viable solution on the table. Raising fares or slashing routes could spark a transit death spiral—losing even more riders and revenue.

But opponents suggest alternative reforms—such as consolidating agencies, cracking down on fare evasion, or exploring congestion pricing downtown—should come before such a sweeping tax hike.

The Political Gamble

Governor Pritzker, who has not yet formally endorsed the tax, is walking a tightrope. He has championed infrastructure investment and green transit. But he’s also pledged not to raise taxes on working families—making this proposal a potentially tricky sell.

If the measure passes, Illinois would join states like New Mexico, Hawaii, and South Dakota that tax services broadly. But critics say those states don’t have Chicago’s cost of living—or its pension obligations.

So, Is It a Good Idea?

Whether this is a good or bad idea depends on whom you ask—and what trade-offs you’re willing to accept.

On the one hand:

• It modernizes the tax code for a service-based economy
• It could offer sustainable funding for public transit
• Wealthier residents who use premium services may pay more

On the other:

• It hits small businesses and families hard
• It risks being regressive if medical and essential services are taxed
• It may discourage spending or push people to neighboring states

With lawmakers set to debate the measure this summer, Illinoisans may soon find themselves paying more just to go about their daily lives—all in the name of saving Chicago’s trains and buses.

Your move, Springfield.

What do you think? Should doctor visits, dog grooming, and car repairs be taxed to keep the CTA running?