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Hinsdale discusses adopting local 1% grocery tax after state repeal; estimated $655,000 revenue
Summary
Trustees heard a first read on imposing a local 1% grocery sales tax to replace state-collected revenue being repealed by Illinois effective Jan. 1, 2026. Staff said the tax is revenue-neutral for the village and estimated 2024 receipts at about $655,000.
Trustees opened a first reading on a proposal that would authorize Hinsdale to impose a 1% local grocery sales tax beginning when the state’s grocery tax is repealed on Jan. 1, 2026. The board discussed mechanics of the change and the effect on village revenues.
According to staff, Illinois currently collects a 1% grocery sales tax on food purchased for off-premises consumption and remits the proceeds to municipalities. The state’s 2025 budget included repeal of that tax, effective Jan. 1, 2026, and included a provision allowing municipalities to impose their own 1% grocery tax while the state continues to handle collection and remittance. Village staff estimated Hinsdale’s 2024 receipts from the state grocery tax at approximately $655,000.
Village President Matt said the local tax would be “revenue-neutral” for the village because residents would continue to pay the same overall tax on groceries; the local option preserves revenue rather than creating a new charge on residents. Staff confirmed the state withholds an administrative fee on overall sales tax distributions but said they understand that the state will not withhold a separate administrative fee on the new 1% grocery tax remitted to municipalities.
The measure was presented as a first reading; trustees did not adopt an ordinance at this meeting and directed staff to return the item for a second reading and final action.
