Credit card processing and merchant services in Chicago, IL
Chicago stacks city, county and transit taxes on the state rate, and restaurants and liquor stores carry extra taxes of their own. Set those up correctly, then take a hard look at your processing rate.
Chicago's sales tax went up on August 1, 2026. The regional transit tax, now collected for the Northern Illinois Transit Authority, rose from 1% to 1.25% in Cook County, which takes the city's rate on general merchandise from 10.25% to 10.50%. If your register still charges 10.25%, it has been under-collecting since August.
Food and drink get more layers. The City's restaurant tax adds 0.5% to food and beverages sold by any place for eating. Inside the MPEA boundaries, prepared food, alcohol and soft drinks sold for immediate consumption carry another 1%. Canned and bottled soft drinks sold anywhere in Chicago carry an extra 3%.
Package liquor changed this year too. Since March 1, 2026, stores with a Chicago package goods license collect a 1.5% City liquor tax at the register on alcohol sold for off-premises consumption. It replaced the per-gallon tax that wholesalers used to charge on those sales, so it's now a line your POS has to calculate. Bars and restaurants still pay the per-gallon tax through their distributors.
Card rules come from Illinois law and the card networks. There's no state surcharge cap, the interchange law on tax and tips is on hold until at least July 2027, and the state's cash-acceptance law starts January 1, 2028. The Illinois page has the details and sources.
Chicago had 2,731,585 residents in the Census Bureau's July 2025 estimate. In the 2022 Economic Census, its retailers took in $39.4 billion and its hotels, restaurants and bars $13.8 billion. If you run a restaurant or a shop here, a free statement review will show what you pay per transaction and what interchange-plus would cost instead.
Rules that matter in Chicago
How Chicago's sales tax rate adds up
In IDOR's distribution example, Chicago's general merchandise rate was 10.25%: 6.25% state, 1.25% City of Chicago, 1.75% Cook County and 1% for the Regional Transportation Authority. On August 1, 2026 the transit tax, now collected for the Northern Illinois Transit Authority, rose to 1.25% in Cook County, which puts the city at 10.50%. Check each address in IDOR's Tax Rate Finder before you set up a terminal.
Sources: Illinois Department of Revenue, PIO-114 (edition in use before January 1, 2026), Chicago general merchandise example (PDF); Illinois Department of Revenue, FY 2026-34, NITA occupation and use tax rate change effective August 1, 2026; City of Chicago, Office of Budget and Management, Glossary of terms
Restaurant, MPEA and soft drink taxes
Every place for eating in Chicago collects the City's 0.5% restaurant tax on the food and beverages it sells. Prepared food, alcoholic beverages and soft drinks sold for immediate consumption inside the MPEA boundaries carry an extra 1% MPEA food and beverage tax, and canned or bottled soft drinks sold in Chicago carry an extra 3%.
Set these up as separate tax categories so each one lands only on the items it covers.
Sources: City of Chicago, Restaurant Tax (7525); Illinois Department of Revenue, PIO-114, How sales and use taxes are distributed (PDF); Illinois Department of Revenue, MPEA food and beverage tax
Liquor tax on package sales
Since March 1, 2026, a retailer selling alcohol for consumption off the premises collects a 1.5% City liquor tax from the customer at the time of sale, calculated on the purchase price before any other tax. It replaced the per-gallon tax on those sales. Package goods license holders were registered automatically and remit monthly, by the 15th of the following month. Alcohol sold for on-premises consumption is still taxed per gallon through distributors.
Sources: City of Chicago, Liquor tax changes effective March 1, 2026; City of Chicago, Liquor Tax (7573)
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Common questions
What is the sales tax rate in Chicago?
10.50% on general merchandise since August 1, 2026: 6.25% state, 1.25% City of Chicago, 1.75% Cook County and 1.25% for the Northern Illinois Transit Authority. Restaurants also collect the City's 0.5% restaurant tax, and sales inside the MPEA boundaries can carry another 1%. Confirm your address in IDOR's Tax Rate Finder.
Do Chicago liquor stores collect a city liquor tax at the register?
Yes, since March 1, 2026. Retailers selling alcohol for off-premises consumption collect a 1.5% City of Chicago liquor tax from the customer at the time of sale, replacing the per-gallon tax wholesalers used to charge on those sales. Bars and restaurants still pay the per-gallon tax through their distributors.
Does Chicago require businesses to accept cash?
We found no Chicago ordinance in force that does. The state's Retail Cash Payment Act takes effect January 1, 2028: retail businesses with staff taking in-person payments must accept cash for sales under $500 and can't post 'no cash' signs. The bill summary says the act preempts home rule, so plan around the state rule.
Can Chicago restaurants add a credit card surcharge?
Yes. With no Illinois surcharge statute, a Chicago restaurant follows Visa and Mastercard: a credit-only surcharge of up to 3% on Visa and 4% on Mastercard, capped at your cost, posted at the door and the register and itemized on the check. Some restaurants prefer a cash discount; see dual pricing vs. surcharging.
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Disclaimer: general information, not professional advice
This page is general educational information, not legal, tax, accounting or financial advice. Rules and rates vary by place and change, so confirm them with the official source and a qualified professional before you act. Full terms are in our Terms of Service.
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