The Village of Mahomet Board of Trustees has voted to implement a 1% local grocery sales tax, set to take effect January 1, 2026, in response to the upcoming repeal of Illinois’ statewide grocery tax. The move is designed to maintain a critical revenue stream for the village, which faces the potential loss of approximately $350,000 annually—about 30% of its sales tax revenue—if no local tax is enacted.
Illinois lawmakers recently passed legislation (Public Act 103-0781) that will eliminate the state’s 1% grocery tax at the start of 2026. However, the same law grants municipalities the authority to impose their own 1% grocery tax by ordinance, without requiring a public referendum. The Illinois Municipal League advocated for this provision to allow cities and villages to preserve vital funding for local services.
The elimination aligns Illinois with the majority of U.S. states that do not tax groceries at the state level.
The Village of Mahomet also placed a 1% Business District tax on most retail and service purchases within its designated business district beginning Jan. 2025. This money is earmarked for infrastructure upgrades and revitalization projects. Both the grocery tax and business district tax are in addition to the 1% sales tax for Champaign County Schools.
For Mahomet, the loss of grocery tax revenue would have resulted in lost revenue. The Village has used sales tax growth in recent years to double the size of its police force.
Governor J.B. Pritzker, who championed the repeal, said, “Even with inflation cooling off, every dollar counts, so I’m proud we’re doing what we can to make trips to the grocery store a little easier,” Pritzker said in a statement. “It’s one more important part of lifting the burden on Illinois families.”
Nearly 60 municipalities voted to implement a local grocery tax, and that number has climbed significantly after the April 1 municipal elections.
Not all communities are choosing to reinstate the grocery tax. Some, like Champaign—a home-rule municipality with broader taxing powers—have opted to increase their general sales tax instead, citing the ability to generate more revenue and greater flexibility.
Beyond the grocery tax, municipalities are pushing for expanded taxing authority, particularly the right for all non-home rule communities to levy a local motor fuel tax to fund infrastructure projects. Currently, only non-home rule municipalities in Cook County or with populations over 100,000 can impose a local gasoline tax of up to 3 cents per gallon. Local leaders argue that broader taxing authority would help address financial disparities and reduce reliance on property taxes.
