Illinois Gov. JB Pritzker signed a bill ending the state’s 1 percent grocery tax, shifting the decision to local governments.
Illinois Governor JB Pritzker has signed a bill that will put an end to the state’s 1 percent grocery tax, reassigning responsibility for the tax to local governments, which can choose to forego the revenue it generates or reimpose the tax locally without having to get voter approval.
However, shoppers won’t feel the change for some time as Illinois’ new law doesn’t go into effect until Jan. 1, 2026.
And while shoppers stand to benefit from the repeal, local governments face the prospect of budget shortfalls, since the state grocery tax income goes to local governments and not the state.
The new law shifts the responsibility of levying the tax to local governments, which can either reinstate it of choose not to do so—foregoing the revenue and cutting services.
To make it easier for local governments that don’t have home rule status to reimpose the tax, the law gives them the option of reinstating it by ordinance, without having to ask voters in a referendum.
Under Illinois law, non-home rule municipalities have limited taxation authority and must ask voters for approval when imposing new taxes. Home rule units, by contrast, have broad authority to impose taxes without having to seek voter approval because they either adopted home rule status by referendum or, in case of those with a population over 25,000, they obtain home rule status automatically.
A similar Republican-backed bill that would have used money from the state’s general fund to cover lost revenue for municipalities failed to pass the state legislature.
“As the State of Illinois continues to put more pressure on local units of government, it all but guarantees higher taxes at the local level, which will be much easier to accomplish with the elimination of the voter referendum,” Chesney wrote.
Democrats who backed the measure, such as Illinois House Speaker Emanuel Welch, have argued that the move empowers local governments to decide whether to impose the tax or let residents keep more of their earnings in their pockets.