United States

City of Chicago: New Water and Sewer Tax to Fund Pensions

Sep 19, 2016
From KPMG TaxWatch

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In a 40 to 10 vote, the Chicago City Council recently approved a new tax on water and sewer services that is expected to raise $239 million annually once fully-phased in.  The revenue collected from the new tax, which had been proposed by Mayor Emanuel, will be used to fund municipal employee pensions. It has been reported that the City’s current unfunded pension obligations are around $18.6 billion. The new water and sewer tax will be phased in over four years, beginning at 59 cents per 1,000 gallons in 2017 and reaching $ 2.51 per 1,000 gallons by 2020.  It is estimated that the average household will see an increase of $4.43 on its monthly unified water and sewer bill, based on an average use of 7,500 gallons a month. By 2020, that increase would grow to $ 18.83 for an average household. Please stay tuned for future updates on this new tax.  

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.