Food With A Price: Breaking Down Chicago’s Hefty Restaurant Tax

When it comes to food, Chicago has a long and varied history. From deep-dish pizza to classic style hot dogs, there are few American cities that embrace historical diversity and a love for delicious casual cuisine quite like Chicago. Those who have been fortunate enough to experience these delicious dishes may notice one unusual thing on their bills: additional taxes and fees that aren’t present in other cities. As an accounting firm that has been serving small businesses throughout Chicago for over twenty years, with various restaurants being included in our client list, Accounting Solutions Ltd. has decided today to explore this issue in more detail. Look no further, those of our readers who have been contemplating just why that delicious slice of pizza costs more in Chicago than it does in Detroit (and no, it isn’t an authenticity thing).
 
To truly delve into this issue, we decided to conduct a thorough analysis of what sales and meals taxes look like in other American cities. What we discovered was quite eye opening, as Chicago actually possesses the highest restaurant tax among the nation’s largest cities. The only other fair-sized metropolis that ousts Chicago in terms of restaurant taxation is Minneapolis, which douses consumers with a 10.775 percent charge. Our city trails very closely behind, with the restaurant tax of the area’s downtown area resting at 10.75 percent. Out of the ten largest American civic regions, Chicago takes a striking lead, even dethroning its sizeable cousins New York and Los Angeles, which respectively boast taxes of 8.875 and 8.75 percent.
 
Different regions of the city possess different rules and regulations regarding sales tax. Because of this zoning, there are certain areas that are able to charge more based off of the needs of the city. This includes the downtown area, where there is an additional 0.25 percent restaurant tax as well as a additional 1 percent tax that is imposed by the Metropolitan Pier and Exposition Authority. This organization runs Navy Pier and McCormick Place and are able to impose what the Illinois Revenue website describes as ‘A retailers’ occupation tax on the gross receipts from food prepared for immediate consumption, alcoholic beverages, and soft drinks..’. These fees are meant to go towards the provision of essential public services including education, road maintenance, and much more. Various health-based incentives have also lead to tax hikes in certain parts of the food and beverage industry, including a recent bill that taxes sweetened drinks by the ounce.
 
Chicago’s restaurant scene is one that has obtained Global recognition, with various establishments and entrepreneurs truly pushing the envelope in terms of innovation and workmanship. As with many great things, this well-established facet of our great city does come with a price in the form of sales and restaurant taxation. Is it worth it to pay slightly more for an authentic Italian beef sandwich? We’d say so. If you want any further details regarding these taxes, or have unanswered questions or a need for financial advice, then feel free to give us a call or reach out via our website.

Chris Amundson is President of Accounting Solutions Ltd. located in Chicago, Illinois

Chicago Accounting Firm & Tax Solutions for Small Businesses

Last updated on February 15, 2018
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