For the consumer, it amounts to 1% of the grocery bill.
But for suburban leaders, the repeal of the state grocery tax in January 2026 represents a loss of millions of dollars in revenues for their communities.
Because the tax is remitted to the communities where the sale occurred, those communities must now find a way to replace those funds, which pay for everything from roads to public safety.
In August, Gov. JB Pritzker signed a bill eliminating the sales tax on grocery items. The state suspended the tax for one in year in 2022, and Pritzker estimated its elimination would save shoppers $400 million annually statewide.
“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,” the governor said in a statement. “It’s one more important part of lifting the burden on Illinois families.”
But the state did open a window for municipalities to replace the state tax with a local 1% tax on groceries.
Thus far, many communities have been slow to respond.
Palatine is among the towns ahead of the curve. This month, village officials approved a 1% tax on groceries that begins in January 2026.
Village Manager Reid Ottesen said the loss of the tax from grocery stores including Mariano’s, Butera Market, Eurofresh Market, Aldi and Jewel-Osco, would cost Palatine between $1.25 and $1.5 million.
Shoppers at Butera in Palatine will still pay the 1% tax on groceries after a statewide tax sunsets in 2026 because the village enacted its own grocery tax recently.
Brian Hill/[email protected]
“We constantly are doing long-range financial planning,” Otteson said. “We need to know what the future holds, and I didn’t feel comfortable going into 2025 not knowing whether we had this million and a half hole in the budget or not.”
Other communities that have followed suit, according to the Illinois Department of Revenue, include Bannockburn in Lake County and Burlington in Kane County.
However, since the state tax isn’t scheduled to end until 2026, other suburbs like Buffalo Grove are taking their time before creating a local tax. But it may be only a matter of time.
“The one thing that sort of drives our decision making is the economic incentive agreement that we have with Woodman’s (Food Market), because it’s tied to the grocery tax,” Village Manager Dane Bragg said.
Buffalo Grove receives about $1.4 million annually from the grocery tax.
Many suburban mayors, along with Republican lawmakers, have been critical of the state’s move to eliminate the tax, saying it ultimately won’t ease the burden on taxpayers.
“This is not a tax cut,” state Rep. Martin McLaughlin, a Republican from Barrington Hills, said earlier this year. “It’s a political shell game.”
Barrington Village President Karen Darch said her village stands to lose $600,000.
“That is the road program for this year,” she said in March. “But for somebody spending $150 on groceries, it’s a savings for them of $1.50. That insignificant amount for one person shopping becomes a huge amount for all of our communities.”
Hanover Park Mayor Rodney Craig, who is also president of the Northwest Municipal Conference and is on the board of the Illinois Municipal League, said he expects many communities to pass their own grocery tax.
“Many are looking at that as a way to not lose revenue, which is really important to keep the burden off homeowners,” he said. “If we had to just let it go, we’d have to pick up the difference of that tax on to our homeowners.”
Experts argue consumers won’t see much of a difference either way.
“The grocery tax is small to the individual,” said Elizabeth T. Powers, an associate professor of economics at the University of Illinois at Champaign who has studied the affects of the grocery tax. “It’s 1%, so it has a very minimal impact on people’s budgets.”
Powers said most families spend less than $30,000 a year on groceries. She also notes shoppers receiving supplemental nutrition assistance are insulated from the tax.
“The idea that you’re really doing a lot to help people who are very poor through eliminating the grocery tax actually sounds good, but it doesn’t do much of anything,” she added.
Although the issue may be a big one for legislators and municipal leaders, some shoppers remain cynical about the state’s actions.
“The state never gives you a break,” Palatine resident Ron Tragasz said while shopping at Butera recently. “Come on.”
As for the potential loss of revenues to local communities, he said, “They’ll come up with another way to get the money out of your pocket.”
Ron Tragasz of Palatine shops at Butera in Palatine, which recently voted to implement a local grocery tax in 2026, when the state’s 1% tax on groceries is eliminated.
Brian Hill/[email protected]