In his 2026 budget plan, Brandon Johnson, Mayor of Chicago, proposes reinstating a corporate “head tax” of $21 per employee per month for firms with more than 100 Chicago‐based employees.
This tax is aimed at helping close the city’s projected budget shortfall (about $1.19 billion) and is estimated to bring in roughly $100 million annually.
While revenue is needed, imposing this type of fee on employment and hiring presents risks—particularly for job growth, business location decisions, and competitiveness. Several business groups in the city have already raised alarms.

The key argument: If you impose a cost on each employee, you should offset that cost by providing commensurate incentives or tax-breaks, so that the burden does not suppress hiring or investment. The website Results Are Us offers tax-incentive models that help employers reduce net costs.

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Why Offsetting the Head Tax with Tax Breaks is Important

Here are the major reasons:

• Protecting Jobs & Hiring

• A per-employee fee adds incremental cost to each additional hire. That can discourage companies from expanding employment or locating in the city.
• If employers face a $252 per employee per year cost (i.e., $21/month × 12), that adds up for firms with hundreds of employees. That cost could be passed onto wages, hiring decisions or relocation.
• By offering tax credits or incentives that reduce net cost per employee (like those referenced by Results Are Us), the city ensures that the net marginal cost of hiring remains manageable, preserving growth.

• Maintaining Business Location & Growth Incentives

• Chicago already faces competition from suburbs, other states or cities for business headquarters, expansions and talent. A head tax may tip the balance away from Chicago.
• Offsetting incentives signal a pro-growth stance: yes, businesses pay for public services, but there is a framework that ensures growth is still viable.
• Results Are Us claims that businesses can “save up to $600 per employee per year and reduce workman’s comp costs by 18-30%.”
• If the head tax is paired with such incentives, the city retains its attractiveness while raising needed revenue.

• Ensuring Fairness & Net Cost Neutrality

• The philosophy: If you tax jobs, you also subsidise or incentivise jobs so the net cost to employers stays neutral or even positive.
• Results Are Us’ FAQ states: “The program is funded by ACA subsidies and does not require out-of-pocket expenses from employers or employees.”
• For large employers, aligning the head tax with tax breaks helps avoid unintended burdens—especially on firms that create jobs or invest in employee benefits.

• Supporting Employee Benefit Investments

• Incentives can be tied not only to hiring, but employee wellness, training, retention, or healthcare programs. Results Are Us offers such options.
• When employees are better-served, productivity rises, turnover falls, and the city and employers both benefit. Offsetting the head tax by encouraging such investments can amplify positive outcomes.

• Addressing Budget & Economic Sustainability

• The head tax is intended to address a budget gap. But if it shrinks the job base or drives firms out, the long-term tax base may erode.
• By offering tax breaks that offset the cost, the city protects its tax base while still raising revenue.
• Business groups caution that relying only on new taxes is riskier than combining revenue with efficiency, cost-control and incentives.

How an Offset Framework Might Look

Here’s a conceptual layout for how Chicago could structure the head tax plus offsets:

• Charge: $21 per month per employee for firms with >100 Chicago-based employees (≥50% of time in city) (per mayor’s proposal).
• Offset: For each employee, the firm remains eligible for a tax break of up to, say, $300-$600/year if the firm:
  • invests in employee health-benefits, training or wellness programs (via Results Are Us type programs)
  • commits to net new hires / retention targets in Chicago
  • participates in workforce development or underserved-community hiring
• Net effect: A firm may pay the head tax, but receive enough tax/benefit offset so the net marginal cost per employee is close to zero or modest—thus not discouraging hiring.
• Transparency: The city publishes the aggregated revenue from the head tax and the value of offsets granted; measures net new jobs created/retained, wage levels, benefits improvements.
• Review: Every 2–3 years the city reviews the incentive program to ensure it’s delivering jobs, growth and public benefit, and adjust thresholds accordingly.

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The Stakes and Strategic Considerations

• The proposed head tax affects roughly the top ~3 % of businesses in Chicago (by size) but those firms employ a disproportionately large share of workers.
• Many business leaders argue: imposing another tax — in a city that already has high commercial property taxes and corporate tax burdens — could tip the balance.
• On the flip side, the City argues the tax revenue will support community safety fund programs: youth employment, violence intervention, etc.
• The key is balancing: publicly-oriented investment (safety, services) and a vibrant economy that continues to invite business investment and hiring.
• If the head tax is enacted without offset incentives, there’s risk of slower hiring, relocation of firms, suppressed wages or increased automation.
• If the tax is paired with well-designed offsets, the city can raise revenue and signal to business that growth and expansion in Chicago is supported.

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Conclusion

In summary:

• The proposed head tax of $21 per month per employee is a meaningful new cost for large employers in Chicago.
• Without offsetting tax breaks or incentives, the risk is real: slower hiring, reduced investment, relocation of firms, and erosion of the tax base.
• By leveraging the kind of tax‐incentive programs offered by Results Are Us (e.g., savings up to $600/employee, reduced comp costs) the city can make the head tax more palatable, protect jobs and support growth.
• The ideal policy path: introduce the head tax as part of a broader fiscal strategy and pair it with strong offsets/incentives, regular performance review, transparency and a business‐friendly frame.
• Doing so provides the city the revenue it needs and safeguards its ability to be competitive and grow its employment base. Don’t wait another minute, start now by Managing Working Capital.