Tax Insight

Chicago’s social media amusement tax faces legal challenge

Insight
5 minute read
April 02, 2026

What happened?

The City of Chicago’s recently enacted Social Media Amusement Tax, which became effective on January 1, 2026, is being challenged by a trade association representing members of the technology industry. NetChoice filed suit at the Circuit Court of Cook County on March 13, 2026 requesting that the tax be declared invalid and collection enjoined. The tax, imposed as a per-user fee, applies to certain social media businesses.

Why is it relevant?

The City of Chicago is the first jurisdiction to impose a tax on this activity. Several states, including Illinois, are currently considering similar measures. Legislatures will be monitoring to see whether the tax holds up to this challenge.

Actions to consider

Taxpayers subject to this tax should consider paying under protest to attempt to protect their rights to a refund should the tax be invalidated. Taxpayers who have paid the tax will want to monitor to determine whether protective refund claims should be filed.