Checking Out Chicago's Checkout Bag Tax

When governments increase taxes, it's expected to happen slowly and gently enough to not be too destructive.  Chicago did not choose that path. 

John F. Di Leo | March 23, 2026

The City of Chicago instituted its Checkout Bag Tax in 2017.  When introduced, allegedly to reduce the use of grocery bags to protect the environment, the charge was seven cents per bag.  It was raised to ten cents per bag in 2025, and was most recently increased to fifteen cents per bag on Jan. 1, 2026. 

Before we look into these ideas in detail, let’s consider that history.  A decade ago, Chicago did not have a bag tax.   Then they started in 2017 with seven cents, liked it, and increased that number by 43% last year.  Then this year, they increased it by yet another 50%. 

When governments increase taxes, we expect it to happen slowly and gently enough to not be too destructive.  Chicago did not choose that path. 

Rather, Chicago chose to be as destructive as possible, more than doubling the prior levy over two short years. 

Now, what exactly do they mean by a “checkout bag?” To what does this tax apply?  The municipal code says it applies to “the retail sale or use of checkout bags in Chicago” - without many exceptions.  So that sounds like it means department stores, grocery stores, liquor stores, pharmacies, home improvement stores, bookshops, etc. - every wholesale or retail establishment that might sell goods in bags. 

The only exception written into the code is SNAP purchases.  If goods are bought with food stamps, they evade the tax.  Every other purchase is hit. 

Some may remember a time when environmentalists encouraged paper bags to discourage plastic; others remember the environmentalists encouraging plastic to discourage paper.  There’s never been agreement, or frankly, much logic, in their arguments against either, since both have their practical advantages and disadvantages, but this particular rule at least appears to be even-handed: they punish the consumer no matter which type of bag he selects. 

Some believe the tax has been a wonderful success, while others argue that it’s a failure and ought to be reconsidered.  Naturally, as with all government policy, the answer depends on what the goal was, and different people see very different things as successes. 

Before the recent increases, the program raised about $6 million per year in additional taxes for the city of Chicago (while providing a tiny hold-back of one penny per bag to each store acting as a tax collector for the process, as if that made up for the pain caused its staff). That revenue is now doubled, likely to something over $12 million/year.  

To those who value government revenue growth, this is a success.  To those who look at any other measure, it is most certainly not. 

The issue is on our minds in Illinois this year because there is a proposal in Springfield to implement such a plan statewide.  

The current proposal........

© American Thinker