Illinois residents can expect changes to local taxes in the future due to a new law that will eliminate the grocery tax by 2026.
There is additional information regarding the recently passed law that will eliminate Illinois’ grocery tax in 2026. Local governments have been granted the authority to implement a 1% tax of their own, in addition to other sales tax hikes.
On Monday, Gov. J.B. Pritzker announced signing House Bill 3144, highlighting the relief that he believes this measure will provide.
“Even with inflation cooling off every dollar counts, so I’m proud we’re doing what we can to make trips to the grocery store a little easier,” Pritzker said in a statement. “It’s one more important part of lifting the burden on Illinois families.”
In 2022, during an election year, Pritzker put forward a proposal to eliminate the state’s grocery tax for a period of 12 months. Additional funds were allocated in the budget to support local governments affected by the decline in revenue. Taxes have been reinstated for the fiscal year 2024.
On Monday, Pritzker emphasized the importance of reducing taxes and implementing policies like a child tax credit to alleviate the daily struggles faced by Illinois residents.
However, the statewide grocery tax will not be eliminated until Jan. 1, 2026. The measure includes additional provisions, such as granting local governments the authority to implement a grocery tax and raise other sales taxes, without requiring a voter referendum, but rather through ordinance. It becomes effective right away.
According to State Sen. Don DeWitte, R-St. Charles, the legislature had an opportunity to support taxpayers by using existing state taxes to fill the revenue gap for local governments through the Local Government Distributive Fund. DeWitte came up with that idea two years ago. However, he informed The Center Square On Monday, the General Assembly decided to transfer the tax burden to local governments.
DeWitte mentioned that certain local elected officials are relieved that the grocery tax elimination has been postponed until 2026. This allows them to avoid addressing the contentious issue during next year’s municipal elections.
According to DeWitte, the elimination of the statewide tax could result in a reduction of up to $420 million in funding for local governments.
Pritzker Signs 59 Bills Into Law, Including Changes to Biometric Privacy Act
“Take Sugar Grove, Illinois, a little community of about 12,000 people, the effect on them is going to be about $300,000. But you get to a community like my hometown in St. Charles, it’s $1.3 million, you get to Algonquin, it’s 1.6 [million dollars], you get to a community like Schaumburg, it’s $6.4 million in lost revenue unless they pass that tax burden onto their residents,” DeWitte said.
He recommends that mayors consider including a non-binding referendum on the ballots, allowing voters to determine whether they prefer reduced services or increased local taxes. There is no need for a voter referendum for this measure. Pritzker’s new law enables the implementation of higher taxes through ordinances.
“I think this was a real opportunity to make something good happen for taxpayers who are dealing with cost of living increases for groceries and everything else,” DeWitte said. “He could have taken that LGDF revenue he was already sweeping, made everyone whole and everyone could have been happy.”
As of now, Chicago has the authority to levy a 9% 911 tax on prepaid wireless plans, while Sangamon County can impose a 3% hotel and motel tax.
Source: The Center Square