Illinois will stop levying a statewide grocery tax on Jan. 1, but millions of people throughout the state will continue paying it locally.
Data compiled by the Illinois Municipal League released Monday shows that 656 municipalities — a little more than half of the state’s municipalities — have passed an ordinance establishing their own grocery tax. Those communities are home to 7.2 million people, or 56.5% of the state’s population. Three counties – Washington, Wabash and Moultrie – have also approved countywide grocery taxes.
Gov. JB Pritzker signed a bill last year eliminating the 1% statewide grocery tax, touting it as a measure that eased residents’ tax burden.
However, the revenue from the state grocery tax goes to municipal governments, rather than state coffers. To make up for those lost revenues, the law allows counties and municipalities to levy their own 1% grocery tax by passing an ordinance, rather than needing a referendum.
“Sales tax revenues — for general merchandise or groceries, alike — are a cornerstone of many local budgets across Illinois, which is why 50.7% of municipalities took action to preserve this funding,” IML CEO Brad Cole said in a statement.
The law required communities wishing to levy their own tax to submit the ordinances to the Department of Revenue by Oct. 1 to begin collecting the tax on Jan. 1.
Many municipalities levy tax
It also gives non-home rule municipalities the authority to impose sales taxes by up to 1% without a referendum. Many communities took advantage of that option, including six of the state’s largest cities: Elgin, Rockford, Aurora, Joliet, Naperville and Peoria.
Enacting a local tax saves some municipalities from suffering a large budget shortfall, such as the $4.5 million Aurora would’ve lost without the tax, according to IML data.
Other small communities will receive far less from the tax, such as $30,000 for Oregon in Ogle County. Revenue from the tax varies in each community based on factors such as how many grocery stores there are in the municipality.
Springfield and Chicago were the only municipalities with more than 100,000 residents that did not enact a tax. Chicago Mayor Brandon Johnson supported a city tax, but the City Council never approved the ordinance. Going forward without the tax will cost the city $60-80 million, according to the IML. Chicago faces a $1.2 billion budget deficit in 2026.
Pritzker frequently lists the elimination of the tax as one of Illinois Democrats’ top accomplishments on economic issues during national media interviews or speaking engagements.
But the loophole in the state’s law means about half of Illinois residents won’t benefit from it. Pritzker has encouraged communities not to pass their own grocery tax.
“I think that the grocery tax is very, very regressive,” Pritzker said at a June news conference in Springfield. “I think a grocery tax is the wrong way to pay for things, but I know that there are choices that get made at the local level that I may disagree with, but that local voters do agree with.”
Some communities have increased other taxes instead. Mundelein, Gurnee and Bartlett have each raised their sales tax rate to replace the grocery tax revenue, the Daily Herald reported.
Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.
