Will Chicago keep grocery tax in place? City has until Oct. 1 to decide

CHICAGO — The clock is ticking for Chicago on whether to continue a decades-old tax on groceries, or further dig itself into a billion dollar budget deficit.

The state’s grocery tax will be phased out January 1, but Springfield is pushing the responsibility onto city’s and towns instead.

State lawmakers signed off last year on removing a one percent grocery tax as part of the Gov. JB Pritzker’s 2025 budget plan. That takes effect on Jan.1.

But instead of just disappearing, there’s now a caveat about what happens going forward. 

“The city of Chicago will not enact its own grocery tax. The tax already exists. There is a process in which the collection of the grocery tax is now being placed in the responsibility of municipalities. So it was a function the state of Illinois decided to relinquish, leaving it to the cities to collect the tax,” said Mayor Brandon Johnson on Tuesday.

What that means is municipalities have the option to keep the tax going, which is something more than 200 of them have already decided to do across Illinois.

Chicago is not amongst them, yet. 

In order to keep collecting that tax, an ordinance needs to be passed and submitted to the state before Oct. 1.

Mayor Johnson and his budget team spoke favourably Tuesday about keeping the grocery tax in place going forward. Other city leaders adding to that Tuesday morning, saying this is a case of billionaire budgeting, and passing the buck to people on day to day blocks. 

The one-percent tax on groceries was enacted back in 1990. It was suspended during Covid and reinstated in 2023.

The following year it was removed under the governor’s 2025 budget to help ease financial burdens on families, but leaving it optional for local governments to continue. A decision Chicago has to make by Oct. 1.

The Illinois Municipal League estimates discontinuation of the levy would cost Chicago of between $60 and $80 million of revenue for the 2026 fiscal year.