Chicago's Controversial New Liquor Tax Is Finally In Effect. What You Need To Know

Back in 2024, Chicago Mayor Brandon Johnson considered the idea of imposing a 34% spirit tax increase. Then, in December 2025, an alcohol sales tax bill advanced in the city, having been brought down from a later-adjusted 3% tax to a 1.5% tax. Now, nearly two years after the idea was first suggested, the 1.5% liquor tax increase has officially gone into effect within Chicago — but customers don't have to pay the tax at every liquor-selling establishment.

Consumers must now pay an additional 1.5% sales tax on all alcohol designed for consumption off the premises. This means that, if you stop into a liquor store or grab your favorite spirit from the grocery store, you'll pay the 1.5% tax on the alcohol you purchase. However, if you have drinks with friends at Chicago's Kumiko, the best cocktail bar in Illinois, you won't be taxed. Bars and restaurants, where consumption is on-premises, are not included in the tax. When customers purchase from a liquor store, the tax is automatically calculated and added into the total the same way as any other sales tax.

With the addition of the finalized 1.5% tax, taxes on alcohol within the city increased to 11.75%, which those against the bill said will harm small businesses. "It will punish all Chicago retailers, not balance the budget," Pat Doerr, the director of the Hospitality Business Association of Chicago, said at a press conference about the tax proposal back in December, per NBC. "It will drive people even more across the suburbs for a lower sales tax."

Other people claimed that the timing of the bill is off. "We are struggling because tariffs have already affected our business," said Mike Moreno, a Chicago business owner, per NBC. Moreno added that immigration raids and inflation have already impacted business, too, and the tax would only make business worse. With that said, the Chicago City Council passed the liquor tax as a way of increasing the city's overall budget by providing more funding. It was initially pushed back from January 1 to March 1, so businesses had time to prepare.