Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Tax Policy topic
No spam. Unsubscribe anytime.
Committee discusses state grocery-tax repeal and local 1% replacement option
Summary
Committee members reviewed the state repeal of the grocery tax effective Jan. 1, 2026, and discussed a state-authorized local 1% grocery tax option to recover lost revenue; staff said the state will collect and pass through revenue but retain a portion, and that item will return to a future agenda with more data.
Staff briefed the committee on a state-level repeal of the grocery tax effective Jan. 1, 2026, and on a new mechanism that allows municipalities to adopt a 1% local grocery tax to replace lost revenue. Officials said the state will still collect the tax and pass most proceeds through to cities, but the state will retain a share (committee discussion suggested the city's net return could be roughly 0.75 of the 1% after the state's portion).
Committee members raised practical questions about which items qualify as "groceries" and how the tax would be applied across different store types; staff said the statutory definitions and point-of-sale classifications determine tax treatment and that they and the Illinois Municipal League had been unable to get fully granular local data for every item. No motion was made. The matter was tabled for future council consideration once staff obtains more detailed revenue projections and itemized tax-treatment information.
Why it matters: The repeal could reduce local revenue by an estimated six-figure amount for the city; adopting a local replacement tax would require an ordinance, careful revenue modeling and local communication about what items would be affected. Next steps: staff will continue to seek data from the state and IML and return with more precise estimates before the October 2025 decision deadline.
