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Illinois set to cut its grocery tax

The 1% tax that is distributed to municipalities would be discontinued beginning in 2026

The state of Illinois is poised to eliminate its 1% tax on groceries.

The State Senate approved a $53.1 billion state budget on Sunday, which includes a provision to discontinue the statewide tax on groceries. Still, Gov. J.B. Pritzker’s original proposal was altered to give municipalities time to adjust for the financial loss of revenue, according to an article in The State Journal-Register.

When the budget proposal was released in February, Pritzker said that cutting the tax would be“for the good of our state’s working families,” but that tax revenue is distributed to municipalities that objected to the proposal. 

Chicago stands to lose an estimated $60 million to $80 million in tax revenue once the tax is cut. Comparatively, Rockford would lose $7 million to $8 million, and Peoria about $4 million, according to the Illinois Municipal League. 

The State Journal-Register reports that the state reached a compromise with the cities that would hold off on the tax cut until Jan. 1, 2026, to give municipalities time to implement their own local taxes. It prevents any new municipal tax from exceeding the original 1% statewide tax, according to the report.

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