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Booking a weekend Airbnb in Chicago could soon come with a slightly heftier bill and, this time, the extra charge would help fund affordable housing across Illinois.
A new proposal in Springfield, House Bill 5776, would add a 4% statewide tax to short-term rentals booked through platforms like Airbnb and Vrbo. If approved, the tax would apply to stays of fewer than 30 days and would take effect on January 1, 2027.
For travelers, it would show up as a separate line item on their bill, much like hotel taxes already do. The tax would be paid by renters but collected and remitted to the state by booking platforms and operators. The proposal wouldn't ban short-term rentals or change local rules governing where they can operate. Instead, it would create a new funding stream for affordable housing initiatives through a newly established Community Land Trust Fund.
Community land trusts are nonprofit organizations that own land and help keep housing affordable over the long term. Under the bill, the Illinois Housing Development Authority would use the money to support the development, staffing and expansion of those trusts across the state.
State Representative Will Guzzardi, who introduced the legislation, says the goal is to create more permanently affordable housing options while helping combat displacement and rising housing costs. "Community land trusts make homeownership affordable for generations with a locked-in 99-year commitment," Guzzardi told Crain's Chicago Business. He described the surcharge as a way to help fund housing opportunities for thousands of Illinois residents.
The tax would apply broadly to nearly every type of short-term rental, including owner-occupied homes, apartments, condos, cottages and dedicated vacation rentals, provided the stay is booked for fewer than 30 consecutive days.
Short-term rentals in Chicago are already subject to a mix of city and state taxes that can push the total tax burden to roughly 27%. Adding another 4% would bring that figure above 30%, making Chicago one of the more heavily taxed short-term rental markets in the country.
So understandably, not everyone is thrilled. Airbnb has criticized the proposal, arguing that many hosts rely on rental income to help pay their mortgages and household expenses. The company says an additional tax could hurt residents who use home-sharing income to stay in their homes.
For now, HB 5776 remains under consideration in the Illinois General Assembly. But if it passes, your next Chicago Airbnb stay could come with a small surcharge—and a much bigger debate about the role short-term rentals play in the state's housing market.