Illinois set to reinstate grocery tax, after a pause for inflation relief

Illinois is set to reinstate its 1% grocery tax after a year-long suspension put in place by the state government to provide some relief from inflation. 

Illinois Gov. J.B. Pritzker first provided the temporary tax relief. 

When the tax is reinstated on July 1, Illinois will again tax food at the supermarket (whereas 37 states don’t tax groceries at all.) Among the 10 most populous states, Illinois is the only one with a grocery tax.

Illinois is one of 13 states set to tax groceries again on this date. The other states include:

Among the 13 states that tax groceries, Hawaii, Idaho, Kansas, and Oklahoma all offer a credit or rebate to offset costs for low-income households.

Pritzker had suspended the 1% tax in his election-year budget, also delaying the state gas tax hike for six months. The automatic gas tax hike returned Jan. 1 and another will come on July 1, for a total increase of 6.2 cents per gallon in 2023.

Inflation was Pritzker’s primary reason for the temporary relief according to the report, but groceries prices are still projected to go up.

From April 2022 to April 2023, the consumer price index for groceries rose 7.1% and is expected to grow by another 4.5% to 8% by the end of 2023.

Price growth in 2023 will still be well above ordinary growth, according to Steve Morris from the U.S. Government Accountability Office.

“Prices are expected to grow more slowly in 2023 than they did in 2022. But it’s still going to grow more than the historic annual average of 2%,” Morris said. “When you look at the forecast for this year’s prices, they’re predicted to increase anywhere from 5 to 10%, and probably settle around 8%. So, they’re still going to be really high.”