Chicago PPLT Summary
Overview
The Chicago PPLT applies to the lease or rental of personal property that is used in the City of Chicago. The lessee owes the 15% PPLT when renting personal property or having a nonpossessory computer lease. A lessor may have a duty to collect the PPLT but they must register as soon as they start leasing PPLT-subject property into Chicago. The PPLT is reported and remitted to the City of Chicago.
What the PPLT applies to
The Chicago PPLT applies to the lease or rental of personal property that is used in the City of Chicago.
A "lease" or "rental" means any transfer of the possession or use of personal property, but not title or ownership, to a user/lessee. The term "lease" includes a "nonpossessory computer lease," which includes all charges for the use of the computer's hardware, computer software, computer programs and databases for any purpose whether or not the charge for use is measured by the actual amount of time used or by some other measure. The words "lease" or "rental" shall include a transfer of the use of software within the meaning of this chapter only if, for purposes of the Illinois Retailers' Occupation Tax and Illinois Use Tax, the software is not "custom" software and the transfer is what has sometimes been referred to as an exempt license of software, but which is more accurately described as a license by which the possession or use of software is transferred, but not title or ownership. (3-32-020(I))
Who owes the tax and the current rate
The lessee owes the 15% PPLT when renting personal property or having a nonpossessory computer lease.
The tax rate is currently 15% (it was 11% during 2025 and 9% 2021–2024) (Chicago gov website).
The tax is paid by the lessee at the time of each lease or rental payment (3-32-030(B)).
Registration requirements
A lessor may have a duty to collect the PPLT but they must register as soon as they start leasing PPLT-subject property into Chicago.
All businesses leasing PPLT-subject property in Chicago are required to register with the city regardless of whether they have a duty to collect the tax yet (confirmed via phone call June 1st).
When a business must collect the PPLT
The registration requirement exists with the first sale, but the collecting and remitting requirement is triggered by nexus.
A business located in the city has physical nexus and must collect the PPLT from the start.
An out-of-state business needs to have economic nexus.
Safe Harbor for out-of-state businesses
Out-of-state businesses that received under $100,000 in revenue from Chicago customers during the most recent consecutive four calendar quarters are not expected to collect Chicago PPLT (2021 City of Chicago Information Bulletin (page 3, section "Safe Harbor")).
This Safe Harbor Rule only applies to businesses that do not have other significant contacts with Chicago, such as:
agreements with other businesses in Chicago;
activities that the business's employees or other agents perform on the business's behalf in Chicago;
any physical presence that the entity has in Chicago;
advertising directed at Chicago customers; and
any other facts that support or oppose the conclusion that the business has purposefully availed itself of the privilege of carrying on business in Chicago. (2021 City of Chicago Information Bulletin (pages 2–3))
Once an out-of-state business meets the threshold
Once an out-of-state business meets the threshold, the business must:
Register with the City's Department of Finance within 60 days (assuming the registration is different when collection is about to begin),
Begin collecting the PPLT within 90 days, and
Continue to collect for at least 12 months.
(2021 City of Chicago Information Bulletin (page 3, section "Safe Harbor"))
Small new business exemption
Local businesses may qualify for an exemption from collecting the PPLT for nonpossessory computer leases. If the business:
holds a valid and current business license issued by the City or another jurisdiction,
has under $25 Million in gross receipts or sales for the most recent full calendar year prior to the annual tax year for which the exemption is sought, and
has been in operation for fewer than 60 months
then the business can fill out the Transaction Tax Exemption Application for Small New Business to seek an exemption from the PPLT as a lessor, lessee, or both (Exemption Form (page 2), City website).
Reporting and remitting
The PPLT is reported and remitted to the City of Chicago.
The Chicago PPPLT is paid via the City's business tax portal. We do not have a current copy of the form but have made a request. There is an old copy of the form that is publicly available.
Product tax codes (PTCs) subject to the PPLT
PTCs that are for a lease of property or for a nonpossessory computer lease (computer's hardware, computer software, computer programs and databases):
DIGITAL_AUDIO_RENTAL
DIGITAL_VIDEO_RENTAL
DIGITAL_BOOK_RENTAL
DIGITAL_BOOK_RENTAL_TEXTBOOK
DIGITAL_GRAPHICS_RENTAL
DIGITAL_GRAPHICS_RENTAL_PHOTOGRAPH
DIGITAL_GREETING-CARD_RENTAL
DIGITAL_TRAINING-MATERIALS_RENTAL
DIGITAL_VIDEO-GAME_RENTAL
DIGITAL_VIDEO-GAME_STREAM_RENTAL
DIGITAL_DATA-PROCESSING
DIGITAL_AUTOMATED-PROCESSING
DIGITAL_DATA-STORAGE
DIGITAL_INFORMATION-SERVICE
DIGITAL_IAAS
DIGITAL_PAAS
DIGITAL_SAAS
DIGITAL_AI