Illinois Governor J.B. Pritzker has signed a law that will eliminate the state grocery tax by 2026. The catch: local governments will gain the ability to pass their own 1% grocery tax, without any requirement for voters to approve those new taxes, likely resulting in a net zero cut for most taxpayers.
Pritzker has said that repealing the grocery tax is “one more important part of lifting the burden on Illinois families.” However, those words ring hollow after Pritzker presided over a record state spending plan of $53.1 billion in 2024, which required tax increases totaling $1.1 billion, according to the Illinois Policy Institute.
Pritzker’s long list of tax hikes includes raising the Sports Wagering Tax from a flat 15% of gross revenues to a progressive structure with rates ranging from 20% to 40%, as well as an increase of the Video Gaming Tax from 34% to 35%.
There’s also the “Re-Enter Tax,” which will raise $25 million in state revenues by expanding the hotel operator’s room occupation tax, as well as a cap on retailer’s sales and use tax discounts, which will effectively raise taxes on retailers by $186 million. Those costs will be borne by the consumer in the form of higher prices, as well as by employees in the form of lower wages.
Pritzker is now attempting to compensate for these tax hikes by taking aim at the state grocery tax.
The revenues of this grocery tax, approximately $420 million annually, previously went towards subsidizing local government. To make up for the lost revenue stream, Bill 3144 allows local governments to substitute the statewide grocery tax with their own tax increases, which they can pass by ordinance.
In an interview with The Center Square, State Sen. Don DeWitte lays bare the issues with this scheme: “A tax cut that has a net zero effect is not a tax cut. All he did is put the burden on local governments and now they’re going to have to deal with that.”
While Pritzker’s law allows local governments to raise taxes by ordinance, DeWitte hopes that Illinois mayors will put the issue to a non-binding referendum, to allow voters to decide whether they want their local governments to take away their grocery tax cut.
If Illinois Gov. J.B. Pritzker wants to take credit for easing the burden on taxpayers, then he should stop the state’s spending frenzy and commit to unambiguous tax cuts instead of half measures like Bill 3144.