Last Updated on November 3, 2025 by Chicago Policy Review Staff
After a lengthy, contentious, and still ongoing political process, New York City became the first American city to implement congestion pricing in January of this year. Despite fierce opposition, the move has been a smashing success and is winning over the public. If Chicago wants to keep pace as one of America’s leading cities, it’s time for it to follow suit and implement congestion pricing of its own.
Congestion pricing is a tax administered to address the negative externalities individuals create by driving private vehicles — namely lost time due to traffic, accidents, and air and noise pollution. The goal is to reduce driving in particularly busy areas and to encourage people to find alternative modes of travel. It is typically area-based, wherein a city will designate a certain zone that drivers will be charged to enter. It can be facility-based as well, meaning drivers would be charged for entering certain bridges, tunnels, highways, etc. Pricing is usually implemented dynamically (i.e. changing depending on time of day or day of the week) as opposed to statically.
While New York was the first American city to use congestion pricing, the policy has long been in place in Singapore (1975), London (2003), Stockholm (2006), and Milan (2008). Studies from those cities show that it has largely been effective in achieving its goals. Numerous researchers have found reductions in traffic, more reliable commute times, reduced pollution, and reduced traffic accidents.
The early results from New York add to the evidence that congestion pricing reduces traffic and its harms. The city began charging drivers $9 to enter the central business district of Manhattan on January 5th. Since then, the city’s traffic is estimated to have fallen by 8%-14% in both Manhattan and its surrounding areas. Crashes and traffics injuries have also decreased by 14% and 15%, respectively. Buses are moving faster and more reliably and weekday public transit ridership is up. Crime is down on subways and in the zoned area due to the increase in foot traffic. Evidence suggests that the city’s air quality has improved as well. On top of everything, the revenue generated from the fees will fund $15 billion in capital improvements to the city’s transportation infrastructure.
Chicago stands to reap the same benefits as New York. The city was recently ranked as the third most congested city in the world and just behind New York for the most congested city in America. Drivers lose an average of 102 hours (or 4.25 days!) per year waiting in traffic, which is estimated to cost the city $6.6 billion in lost productivity even before taking into account the lost time of bus riders stuck in traffic. In 2023, 136 people died from traffic accidents in Chicago and another 2,337 suffered serious injury. Moreover, the American Lung Association gave the metro area an F grade for its air quality and ranked it 15th worst in the country.
Beyond addressing the negative aspects of driving, congestion pricing also presents an opportunity to develop another sustainable source of revenue. Both the city of Chicago and the Regional Transit Authority are staring down big budget deficits for 2026. The city is in desperate need of new sustainable revenue sources, as evidenced by some of the bespoke taxes raised for this year’s budget on things like streaming services, grocery bags, and ride-sharing services. The revenue shortfall is expected to be even larger for next year’s budget, estimated by the Mayor to be $1.1 billion, and the city can only perform the municipal equivalent of digging through couch cushions so many times before deep service cuts will be needed. Separate from the city’s finances, the Regional Transit Authority (made up of CTA, Metra, and PACE) will face a projected $770 million collective budget gap, nearly 20% of its annual operating budget, as federal money allocated from COVID era funds run out. Instituting congestion pricing would provide the city with a large and sustainable new revenue source to address these looming fiscal crises — one estimate projected annual revenue could be between $756 million and $1.3 billion.
Political support for the policy, a key component for success of congestion pricing proposals, has grown in Chicago following New York’s implementation. Mayor Johnson suggested that the city should explore its implementation. And Ald. Vasquez, a leader of the city council’s progressive caucus, has voiced strong support. The Trump Administration’s recent attempt to pull federal approval for New York City’s plan could also help Chicago transit advocates find support, as it may negatively polarize the heavily democratic city into championing congestion pricing.
The Trump Administration’s hostility to congestion pricing prevents Chicago from implementing a fare zone while Trump is in office, as federal approval is required. An alternative would be for the city to impose charges on the major thoroughfares that run through the city such as the Dan Ryan Expressway, the Eisenhower Expressway, and Lake Shore Drive, as the Transportation Secretary’s letter removing federal approval for New York’s system appeared to leave that method as viable. Pursuing a zone-based system is still a medium-term option, however. Since implementation can take years, local transit advocates and policymakers could begin laying the groundwork now, preparing for a zone-based system under the next administration not hostile to the policy.
Two arguments are typically made in opposition to congestion pricing. The first is that congregation pricing is regressive because the tax burden is disproportionately larger for low-to-moderate income people. That’s a valid concern, particularly since Illinois is one of the few states in which the income of drivers and public transit riders is relatively equal, but it can be addressed by providing income-based fare reductions, as was done in New York. Moreover, the benefits side of the ledger should not be forgotten when considering the equity equation of congestion pricing, as low-income communities stand to benefit more from reduced pollution and traffic accidents and improved bus service.
The other common criticism of congestion pricing is that it will harm local businesses by reducing consumer traffic in the designated area. However, early data from New York shows no impact on sales in the congestion pricing zone. Business also stand to gain from the reduction in shipping costs that would result from less traffic congestion.
Chicago is a world-class city on almost any metric and has the added advantage of so far avoiding the worst of the housing affordability crisis plaguing its peer cities New York and Los Angeles . However, its reputation is lagging nationally because of fiscal mismanagement and an unearned reputation with respect to crime. Congestion pricing won’t fix everything, but it’s Chicago’s chance to modernize transit and prove it’s ready to lead in the 21st century with foresight and innovation.