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SaaS tax rates in Chicago

Alice Trout by Alice Trout
December 13, 2022
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SaaS tax rates in Chicago
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Starting Jan. 1, 2021, the tax rate for software leasing is 9%. Also, starting July 1, 2021, Chicago applies the economic nexus standard to remote providers.

The City of Chicago levies a rental tax that applies to software as a service (SaaS) revenues.

The City of Chicago levies a rent tax on the rental/lease of all property, other than real property, in Chicago. Thus, rentals of tangible property, including car rentals and equipment rentals, are taxable. The rental tax also applies to applications made available to customers through access to the provider’s computer and software (e.g., cloud computing, cloud services, hosted environment, SaaS, platform as a service (PaaS) and infrastructure as a service (IaaS)). Read also: SaaS marketing tools.

SaaS is a form of cloud computing, a service model in which subscribers are provided with off-the-shelf application software that is fully maintained by a provider. Examples of such companies, Netflix, Spotify, Adobe.

Alice Trout

Alice Trout

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