Chicago proposes $0.50-per-user tax on social media companies

Chicago City Council introduced an ordinance establishing a Social Media Amusement Tax targeting platforms with more than 100,000 Chicago users. The tax would charge social media businesses $0.50 per Chicago consumer above the 100,000-user threshold, with each calendar month counting as a separate reporting period. The proposal defines social media businesses as for-profit entities that provide social media access and collect consumer data for commercial purposes. News organizations, search engines, internet service providers, and streaming services without user-generated content are excluded from the tax.

The bottom line: Revenue from this tax would fund a new Protecting Care Fund for mental and behavioral health operations. The ordinance faces legal challenges because it targets only online social media platforms while exempting non-digital businesses that also collect and sell consumer data, creating potential violations of the Internet Tax Freedom Act. If passed, the tax takes effect January 1, 2026.