Residents of Illinois who go shopping in early January 2026 will be in for a surprise when they check out. After all, news of a new law that promises to save local residents money has been circulating for months. The 1% tax on groceries is going away, but we may be in for a surprise when we see the shopping receipt.
Some respite during inflation
It all started with Public Law 103-0781, signed last August 2024. With it, Governor J.B. Pritzker sought to eliminate the 1% state tax on groceries. This change will officially take effect on the first day of 2026.
It was a regressive tax that punished those who have less. After all, low-income families spend a much larger percentage of their income on food than wealthy families.
Therefore, taxing food is considered unfair. According to official estimates, this tax will return an average of $130 per year to the average family’s pocket. In an economy where inflation has hit hard, every dollar counts. But where did this tax come from? The 1% tax on groceries was established in 1990. Let’s not get too upset; we should remember that it was an improvement on the previous situation. In the past, food was taxed at the same high rates as any other general merchandise, such as clothing or appliances. The 1990 tax reform was a big step forward, as it reduced the rate for food and medicine.
However, this money collected by the 1% did not remain in the Illinois state coffers, but was distributed directly to local governments. In other words, your city and county have depended on this income for more than 35 years. These tax contributions pay for road repairs, police services, and park maintenance… Which is a problem.
The legal loophole for the grocery tax
We all like to see taxes eliminated, but this has created a hole in local budgets. For decades, mayors across Illinois have needed this revenue to keep their municipalities running smoothly. That’s why the law includes a clause that means nothing changes: the state eliminates its state tax… but each local government can create its own tax if it sees fit (and without having to ask its voters).
This creates two scenarios for Illinois residents: if your local government decides to tighten its belt and not replace the tax, you will save 1% on your shopping every time you go to the supermarket. If, on the other hand, your local government does the math and sees that it desperately needs the money, it will approve the new municipal tax and the final price of your shopping will not go down by even 1/100.
This has happened in places like Highland Park, which has already taken steps to do this. Simply put, the money will no longer be a state tax, but a local tax.
Other states following suit
Illinois is not the only state conducting this experiment. The state of Arkansas has also eliminated its grocery tax as of January 1, 2026. Although this is a national trend, local enforcement will make the difference.
Now, legislation is making it very clear that supermarkets must provide a record of prices before and after the tax elimination. On the shopping receipt, stores must be very clear about who is charging you the tax. If your municipality decides to apply the new local tax, it must appear separately on the receipt, not in a generic line of mixed taxes. You will clearly see a section that says “Municipal Grocery Tax.”
You will be able to look at your receipt and know exactly whether your mayor decided to charge this tax or not. They will no longer be able to hide this extra cost from the state… And you will seriously ask yourself whether you like the mayor’s administration in the next municipal elections.