Chicago leaders hand $40K in debt to each taxpayer, second-worst in U.S.
Each Chicago taxpayer is on the hook for $40,600 in city debt today, the second most among major U.S. cities. Add in the debt Illinois state leaders grew last year, and Chicago taxpayers owe nearly $80,000.
Chicago ranked as the nation’s second-worst sinkhole city again in 2025, with Chicagoans shouldering the second-largest taxpayer burden among major cities, according to a new report.
Every taxpayer in Chicago would need to contribute $40,600 to pay down the city’s total debt, according to Truth in Accounting’s 2025 State of the Cities report. That is the second most among taxpayers in the 75 most-populous U.S. cities, behind only New York.
It’s also more than the next two highest-ranked major U.S. cities, Portland and New Orleans, combined.
But that only covers Chicago’s debts. Those same taxpayers would need to contribute an additional $37,000 to pay down the state’s existing debts, according to Truth in Accounting’s most recent 2024 State of the States report.
That leaves Chicago taxpayers responsible for nearly $80,000 in city and state debt, or more than the typical Chicagoan earned in 18 months.
Both Chicago and Illinois earned “F” grades for their financial management from the accounting group, underscoring years of unbalanced budgets and overly generous public pension and other spending promises these taxing authorities – and their residents – could not afford.
Only New York and Chicago receive the “F” grade for passing unbalanced budgets and saddling each taxpayer with more than $20,000 in debt. Illinois was also one of four states to get an “F” for the same financial sins.
In total, Chicago would need $40.9 billion to cover its existing debts. That’s on top of the $175.4 billion Illinois would need to cover its own unpaid bills, according to the group.
Just five of Chicago’s pension systems held more debt than 43 U.S. states last year, with all five ranking among the worst-funded local retirement systems in the nation. The municipal, laborers, police, fire and teachers pension funds carry about $51 billion in pension debt, which are primarily funded through raising property taxes.
Transit and water pensions are also paid by Chicagoans, but do not come out of city budgets. They, too, are among the bottom 10 in the U.S. for poor funding.
Cook County employee pensions were over $7 billion in debt as of 2023, but funded at 67.2% of what they will eventually need. Chicagoans are taxed for those pensions, too.
More than 80% of Chicago’s property tax levy – including all of the automatic annual increase – goes to pensions, and the Chicago Teachers’ Pension Fund has its own property tax levy specifically dedicated to pensions.
Compounding this is Illinois’ worst-in-the-nation pension crisis. Not only is Illinois’ pension debt the largest in the U.S. as a percentage of the state’s gross domestic product, but its also the worst funded in the nation at about 52%.
It falls between the 60% experts describe as deeply troubled. Funding ratios below 40% are likely past the point of no return.
Taxpayers in Chicago and across Illinois are asking for relief from the state’s No. 2 in the nation property taxes and No. 1 in the U.S. state and local tax burden. This starts with right-sizing future pension promises to fit what taxpayers and the state can afford while protecting already promised retirement benefits.
A constitutional pension reform plan such as one originally developed by the Illinois Policy Institute – based loosely on bipartisan 2013 reforms that passed the Statehouse and were approved by the governor – would help to eliminate state and local unfunded pension liabilities and achieve retirement security for government pensioners without taking away current benefits.