State lawmakers in Springfield are aiming at Illinois’ short-term rental market with a pair of new bills that would slap a 4% surcharge on stays under 30 days and funnel the cash into a Community Land Trust Fund. The idea is to use those dollars to build and preserve homes that stay permanently affordable, while shifting a lot of the tax collection work from individual hosts to the big booking platforms.
As first reported by Crain's Chicago Business, the House version was filed by Rep. Will Guzzardi and paired with a Senate companion that would dedicate the new levy to a fund run by the Illinois Housing Development Authority. Crain’s reporting helped shove the proposal into the broader conversation about how to create a more reliable funding stream for affordable housing.
What the bills would do
Both measures would create a 4% surcharge on short-term rental bookings and earmark the proceeds for an Illinois Community Land Trust Fund, but they split hairs on how exactly that money gets collected.
The Senate bill would amend the Hotel Operators' Occupation Tax Act so that the charge is calculated as 4% of 94% of a platform’s gross rental receipts, with the resulting revenue deposited into the new fund, according to the Illinois General Assembly.
The House companion, HB5776, instead frames the levy as a 4% excise tax on the rental price, hands collection authority to the Department of Revenue, and sets a remittance threshold that makes booking platforms responsible for payment if they process at least $100,000 in Illinois bookings over the previous 12 months. Collections would kick in on Jan. 1, 2027, per the bill text on the Illinois General Assembly.
How supporters say it would help
Housing advocates say the surcharge could finally give community land trusts a steady pot of money to work with. These nonprofits buy, rehab, and preserve homes as permanently affordable, often keeping prices in check for generations instead of just one round of buyers.
A fact sheet from Housing Action Illinois estimates that a 4% surcharge on short-term rentals could generate about $10.5 million a year for land trust acquisition, staffing, and technical assistance.
How big is the local market?
Chicago’s short-term rental footprint is already sizable. A memo from the City Council’s Office of Financial Analysis counted 3,901 active, registered short-term rental units as of November 2025 and notes that city taxes and fees stack on top of state levies.
The same analysis finds that the combined local charges can push the total tax burden for some listings into the high-20s percentage range, according to the Council Office of Financial Analysis.
Who would collect the tax
Under the House draft, most large booking platforms that clear the $100,000 annual Illinois threshold would be on the hook to collect and remit the surcharge themselves. Smaller platforms and individual hosts would still be responsible for filing and paying the tax directly.
That framework lines up with existing Illinois rules for marketplace facilitators. The Illinois Department of Revenue has issued guidance and private letter rulings spelling out when intermediaries, rather than individual sellers or hosts, must collect and remit lodging and occupation taxes.
What happens next
Neither bill is law yet. Both must survive committee hearings and floor votes in their respective chambers before anything lands on the governor’s desk.
SB3169 has been filed in the Senate and assigned to the Revenue Committee for review, while HB5776 is still in introduced status in the House. LegiScan shows the Senate bill’s current status and list of sponsors.
Why this matters for hosts and travelers
If the proposal becomes law, it would add yet another layer to the already complicated mix of taxes short-term rentals face in Illinois, and many hosts are likely to push that extra cost straight onto guests’ bills.
Supporters argue that a relatively modest fee is a fair trade-off for creating a reliable funding stream to buy and preserve homes as long-term affordable housing. Critics of similar efforts elsewhere counter that extra levies can chip away at host income and discourage people from listing their properties at all.
Industry and tax specialists note that in practice, big marketplaces already routinely collect and remit occupancy taxes for hosts, a pattern outlined by the Sales Tax Institute.
