Bethalto Votes to Keep 1% Grocery Tax as Illinois Ends Statewide Levy

Illinois lawmakers recently voted to eliminate the state’s 1% grocery tax beginning in 2026, a move celebrated as relief for families facing high food costs. But some municipalities are choosing a different path. In Bethalto, Illinois, local officials voted unanimously to keep their 1% grocery tax in place. The decision highlights the tension between state-level tax relief and local revenue needs.

What Happened

• The statewide grocery tax repeal will take effect on January 1, 2026.

• Municipalities were given authority to decide whether to keep a local version of the tax.

• The Village of Bethalto voted unanimously to retain its 1% grocery tax.

• Local officials argue the revenue is needed to fund essential services and offset budget pressures.

  
  

Why It Matters

1. Consumers: Residents will continue to pay higher prices on groceries compared to neighboring jurisdictions that do not retain the tax.

2. Municipal Finance: The decision reflects how reliant local governments are on sales tax revenue to sustain budgets.

3. Equity Concerns: Grocery taxes are regressive, hitting lower-income households hardest. Policymakers must weigh affordability against fiscal necessity.

4. Policy Precedent: Other Illinois municipalities may follow Bethalto’s lead, creating a patchwork of local rules across the state.

   
   

Implications for CPAs and Advisors

• Business Clients: Retailers must adjust point-of-sale systems to reflect local grocery tax rates, which could vary by jurisdiction starting in 2026.

• Individual Clients: Households should understand why grocery costs differ between nearby communities.

• Multi-Location Planning: For businesses operating across Illinois, compliance complexity will increase as localities choose different paths.

  
  

Looking Ahead

Bethalto’s decision underscores the balancing act between affordability for residents and fiscal stability for local governments. With Illinois allowing municipalities to chart their own course, tax professionals should prepare for increased client questions on both compliance and cost implications.

Stay Ahead of Local Tax Changes

From grocery taxes to property levies, local governments often drive tax changes that directly impact consumers and businesses.

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