Grocery Tax Update - Village of Homewood 

Illinois Public Act 103-0781 states that the Illinois grocery tax of 1%, which is currently levied by the State and distributed to local governments, is scheduled to be eliminated effective January 1, 2026 and provides municipalities the authority to enact a replacement local sales tax on grocery items. 

In light of Governor JB Pritzker’s recent proposal to eliminate the State of Illinois 1% grocery sales tax, the Village of Homewood Board of Trustees voted to implement a local 1% grocery sales tax effective January 1, 2026, in alignment with other surrounding municipalities in Cook County.

This local tax measure is intended to preserve critical General Fund revenues that support essential Village services.

Under current State law, the 1% grocery tax falls under two categories: (1) grocery items purchased directly from a store but does not include alcoholic beverages, soft drinks, candy, cannabis-infused food or beverages or prepared food meant for immediate consumption and (2) groceries that may be delivered directly to the consumer (for example: meal prep delivery services). Both categories will continue to be taxed at 1% under the local grocery tax.

Frequently Asked Questions (FAQ) on the Grocery Tax in Illinois

1. What is the grocery tax in Illinois?

The grocery tax in Illinois refers to the 1% sales tax on groceries that has been in place since the 1990 sales tax reform.  The 1990 reform eliminated state taxation on groceries but allowed for a 1% grocery tax distributed to local governments. It also standardized tax collection, preventing a patchwork of local grocery taxes administered independently by municipalities.  The proceeds of the tax are distributed to local governments by the state.

2. When is the State of Illinois grocery tax ending?

 The Illinois state grocery tax of 1% is set to be eliminated effective January 1, 2026, as per Public Act 103-0781, and provides municipalities the authority to enact a local sales tax on grocery items.

3. Can local governments impose their own grocery tax?

 As of June 4, 2025, according to the Illinois Policy Institute, over 209 municipalities throughout the State of Illinois have already passed an Ordinance to impose a local grocery tax to replace the state tax. Without this tax, local governments could face budget shortfalls. 

4. Do municipalities currently have the authority to impose grocery taxes?

Under current law, municipalities do not have the authority to impose grocery taxes unless granted by state legislation. The new law allows municipalities to establish their own grocery tax up to 1%, starting in 2026.  

5. Will consumers see a difference in grocery prices due to the new local grocery tax?

NO, consumers are already paying the 1% state grocery tax. The local tax is simply replacing the state tax.

6. How will the revenue from the grocery tax be used?

 The Village of Homewood relies on the revenue from grocery taxes to help fund essential services such as police and fire departments, public works, and critical infrastructure projects. Approximately 11% of the total sales tax revenue, roughly $650,000 per year, comes from grocery sales. 

7. What would happen if the Village of Homewood chose not to implement a grocery tax?

 If the Village of Homewood does did not implement the 1%  grocery tax, our general fund would have a deficit of $490,000 absent any adjustments to local spending. 

8. How will the municipal grocery tax be collected?

 The Illinois Department of Revenue (IDOR) will administer and collect the municipal grocery sales tax on behalf of municipalities that enact it, ensuring a streamlined process for all retailers.

9. What other communities near Homewood are enacting the 1% grocery sales tax? 

Surrounding communities adjacent to Homewood that have already passed the 1% grocery sales tax are Chicago Heights, Markham, Tinley Park, Orland Park, Crestwood, and Blue Island. 

10. Does this grocery sales tax apply to everyone who shops in Homewood, regardless of where they live? 

Yes! Visitors from surrounding communities who purchase groceries in Homewood will see the 1% sales tax on their receipts and continue to support Homewood’s municipal services.