Five north suburban towns are among the hundreds statewide that plan to continue the grocery tax the General Assembly and the governor approved repealing for Illinois last year, with local municipalities opting to not forgo the multi-million dollar revenue stream.
“That money helps pay for important services like road maintenance, infrastructure, plus social support services,” Niles acting Village Manager told Pioneer Press in an email.
One year ago, Governor JB Pritzker signed legislation that eliminated the state’s 1% tax on groceries but allowed local towns and counties to impose their own local grocery tax by ordinance.
Municipal leaders across the state had until Oct. 1 to provide a certified copy of the ordinance adopted that authorizes collection of a 1% tax on groceries, officially called the Municipal Grocery Occupation Tax. It was to be sent to the Illinois Department of Revenue – which will collect the tax and distribute it to municipalities.
As of earlier this month, Park Ridge, Morton Grove, Norridge and Niles had each provided the documentation and received approval from the IDR. The tax is expected to go into effect as of Jan. 1, 2026, the same day the state grocery tax expires.
Area municipal leaders say that continuing to collect taxes on groceries helps preserve millions of dollars in income – some as much as $2.7 million.
The state first imposed the grocery tax in 1990 as part of what legislators deemed sales tax reform efforts. A standard 1% tax on food was imposed statewide in all municipalities, according to IDR.
The Chicago Tribune reported in May that the tax generates an estimated $400 million annually, according to the governor’s office. Funds collected by the state are distributed to local municipalities who apply them to cover police, firefighters, and public works.
Many leaders in suburban towns worried the loss of this state revenue stream would impact services, and as a result, home rule municipalities throughout the state have approved ordinances to continue the tax, according to IDR spokeswoman Maura Kownacki.
Here’s where area towns stand with the grocery tax. Village leaders in Norridge were unavailable for comment.
Lincolnwood
“Unlike other neighboring communities, it isn’t a significant revenue source for the village at $31,000,” Lincolnwood Finance Director Elizabeth Holleb told Pioneer Press about grocery tax.
She said the village does not currently have a major grocer or big box retailer – like Jewel, Mariano’s or Walmart – in town. Instead, the current revenue is generated by other small businesses that sell groceries as part of their operations.
“However, we do anticipate a full-fledged grocery store as part of our new Project 1860 redevelopment project at Lincoln and Touhy avenues,” Holleb said.
According to the village website, “the shell of the Amazon Fresh grocery store concept is now complete.” Officials explain on the website that a permit has been issued, though construction has not started.
Niles
The village of Niles relies heavily on the money generated by the state’s grocery tax, town officials told Pioneer Press.
According to Schneider, Niles received more than $2.7 million in sales tax from food sales in fiscal year 2024. In April, the Village Board approved an ordinance implementing a Municipal Grocery Retailers’ Occupation Tax and Municipal Grocery Service Occupation Tax.
“The local tax is structured the same as the state grocery tax and revenue projections are the same,” she said. “Losing this funding would mean cutting key services that residents rely on.”
In addition to roads and other infrastructure projects, Schneider said in Niles, the grocery tax income also helps pay for other offerings like the Senior Center and Family Services.
IDR has approved Niles’ ordinance as of Sept. 16, according to state agency records.
Park Ridge
Like Niles, the city of Park Ridge generates in excess of $1 million from the current statewide grocery tax. In an April memo to the City Council, Finance Director Chris Lipman said Park Ridge could lose an estimated $1.2 million in 2026 as a result of the elimination of the state grocery tax. He added that the tax is a rate on the cost of groceries and the city could anticipate that the revenue loss would continue to increase each year.
“There are significant benefits to this revenue stream,” Lipman wrote in the memo. “It would not be sustainable in the long term to lose this revenue without supplementing with some other form of revenue. More importantly, we can assume that a significant portion of revenue is generated by sales to individuals living and working outside of Park Ridge. … Finally, this is not an increase in taxes; it is a continuation of a tax that currently exists and has been incurred by consumers for many years.”
Park Ridge City Council members agreed, voting 6-1 on April 21 to keep a grocery tax in the city.
IDR approved the city’s ordinance as of Sept. 2.
Morton Grove
Last December, the Morton Grove Village Board voted 6-0 to pass an ordinance implementing the Grocery Retailers’ Occupation Tax. The village previously collected $152,000 from the state grocery tax, according to Village Administrator Chuck Meyer.
He told Pioneer Press the reason village leaders decided to enact a new grocery tax was “to preserve the status quo of revenue sources within the village and not create an additional tax on residents.”
He said the village didn’t come to the decision quickly.
“The village engaged in a deliberative process regarding different considerations as part of the budget before arriving at the decision to preserve this source of revenue,” Meyer said. “In lieu of a loss of $152,000 in revenue, the village would have had to look at property taxes.”
The village’s ordinance was OK’d by IDR as of Sept. 3.
Elizabeth Owens-Schiele is a freelancer.