Grocery shoppers in 665 Illinois cities, towns, and villages saw no tax relief at the register on January 1, 2026, even though the state officially stopped collecting its 1% sales tax on groceries that same day. Those local governments passed their own ordinances to keep charging the same penny-per-dollar levy, creating a patchwork where a shopper’s tax bill depends entirely on which side of a municipal boundary the store sits on.
How Public Act 103-0781 split Illinois into two grocery-tax zones
The state legislature passed Public Act 103-0781, which removed “food for human consumption consumed off the premises” from the state’s 1% sales and use tax base effective January 1, 2026. At the same time, the law created explicit authority for municipalities and counties covering unincorporated areas to adopt a replacement 1% local grocery occupation tax by ordinance. The result is a two-track system: residents in communities that did not adopt the local tax now pay less at the checkout, while residents in the 665 jurisdictions that filed ordinances with the Illinois Department of Revenue continue paying the same amount they always did.
The tension is straightforward. State lawmakers framed the repeal as consumer relief, but the statute simultaneously handed local governments a tool to recapture the lost revenue. For cities already stretched thin, the choice was simple: pass the ordinance or absorb a budget gap. Whether those filing communities will lean harder on property-tax levies in the next fiscal year, or whether the local grocery tax fully replaces the state stream, is the fiscal question hanging over hundreds of municipal budgets heading into 2026.
665 local ordinances filed with IDOR before the January deadline
The Illinois Department of Revenue required each municipality or county to file its grocery-tax ordinance before a set deadline for the tax to take effect on January 1, 2026. In its FY 2026-03 bulletin, the department spelled out the procedural rules: local governments had to draft an ordinance imposing the 1% tax, formally adopt it, and submit it to the department. IDOR then compiled and published a roster of every jurisdiction that completed the process. A separate notice, FY 2026-11, directed retailers to that roster so store operators could program registers correctly before the new year.
The department’s grocery tax ordinance information hub serves as the central clearinghouse for compliance guidance, filing resources, and the official list of adopting governments. Retailers operating in multiple municipalities must now check that list to determine whether they collect the local levy or pass the full state cut through to customers. A store in one suburb may charge the tax while a competitor a few blocks away in a different municipality does not, an outcome that could shift where price-sensitive shoppers choose to buy groceries.
Unanswered fiscal tradeoffs for filing and non-filing communities
Several important questions remain open. The primary ordinance status file listing all 665 jurisdictions and their individual filing dates is referenced by IDOR but has not been reproduced in the bulletins or hub materials available for independent review. Without that granular data, it is difficult to assess whether smaller towns or larger cities dominate the opt-in group, or whether geographic clusters exist that effectively recreate the old statewide tax within certain regions.
That lack of public detail also obscures how much revenue is at stake community by community. For a dense suburb with multiple full-service supermarkets and warehouse clubs, a 1% tax on groceries could represent a stable and significant income stream. For a rural village with a single small grocer, the same tax might generate only modest revenue while still frustrating residents who hear that the state “eliminated” the grocery tax. The political calculus for local officials will differ sharply depending on how much money the ordinance actually raises.
Non-filing communities face their own tradeoffs. Residents there receive the full benefit of the state’s repeal at the checkout line, and local leaders can point to lower grocery bills as a tangible form of relief during a period of elevated food prices. But foregoing the replacement tax means giving up a revenue source that neighboring towns have chosen to preserve. Over time, that could pressure officials to consider higher property taxes, new fees, or spending cuts to keep budgets balanced.
Filing communities, by contrast, may avoid an immediate budget shortfall but risk criticism that they undermined a state-level attempt at tax relief. Some may argue that keeping the 1% levy on groceries is more equitable than raising property taxes, which fall heavily on homeowners and landlords. Others may contend that taxing basic food staples is regressive and that municipalities should instead look to broader-based revenue options. Those debates are likely to surface as residents compare receipts and realize why a cart of groceries costs more in one town than another.
Over the coming year, the lived experience of shoppers and retailers will test whether Illinois’ hybrid approach is sustainable. If consumers respond strongly to price differences by shifting where they shop, local officials may revisit their decisions. If, instead, the 1% variation proves too small to drive behavior, the new patchwork could quietly become a permanent feature of the state’s tax landscape, locking in two distinct grocery-tax zones divided not by state lines but by city limits.
