By Krista A. Cohane
On August 5, 2024, Illinois Governor J.B. Pritzker signed legislation repealing the state grocery tax and creating an exemption for food prepared by certain licensed entities. While the law reduces state tax, it authorizes localities to adopt grocery taxes. Additionally, the state prepaid wireless 9-1-1 surcharge is eliminated; however, Cook County’s authority to impose a surcharge is reinstated. Further amendments were made to the telephone and telecommunications service provisions, and Sangamon County is authorized to adopt an ordinance to impose a hotel tax. (L. 2024, H3144 (P.A. 103-0781), effective 08/05/2025, unless otherwise noted; Illinois Dept. of Rev. Info. Bulletin No. FY 2025-02, 08/01/2024.)
State grocery tax repeal.
Beginning January 1, 2026, Illinois will repeal the 1% sales and use grocery tax on food for human consumption that is to be consumed off premises where it is sold. Food for human consumption does not include alcoholic beverages, food consisting of or infused with adult use cannabis, soft drinks, candy, and food that has been prepared for immediate consumption.
Licensed entity food exemption.
Beginning January 1, 2026, food prepared for immediate consumption and transferred incident to a sale of service by an entity licensed under the Hospital Licensing Act, the Nursing Home Care Act, the Assisted Living and Shared Housing Act, the ID/DD Community Care Act, the MC/DD Act, the Specialized Mental Health Rehabilitation Act of 2013, the Child Care Act of 1969, or by an entity that holds a permit issued pursuant to the Life Care Facilities Act, is exempt from sales and use tax.
County and municipal grocery tax.
The corporate authorities of any municipality or county may, by ordinance or resolution that takes effect on or after January 1, 2026, impose a tax on all persons engaged in the business of selling groceries at retail in the county or municipality on the gross receipts from those sales made in the course of business. The tax will be imposed at the rate of 1% of the gross receipts from sales. Taxpayers subject to the tax may reimburse themselves by separately stating the tax as an additional charge, which charge may be stated in combination, in a single amount, with state tax that sellers are required to collect.
Cook County Regional Transportation Authority Tax.
In Cook County, the rate of the Regional Transportation Authority Retailers’ Occupation Tax on sales of food for human consumption that is to be consumed off the premises where it is sold will be taxed at 1.25%.
Sangamon County.
The county board of Sangamon County is authorized to adopt an ordinance to impose a hotel tax on all persons engaged in the county in the business of renting, leasing, or letting rooms in a hotel that is subject to a specified hotel tax under the Illinois Municipal Code. The tax rate cannot exceed 3% of gross rental receipts.
Prepaid wireless 9-1-1 surcharge.
Effective August 5, 2024, Illinois has eliminated the 3% prepaid wireless E911 surcharge imposed on sales of wireless telecommunications. However, the bill reinstates Chicago’s authority to impose a surcharge. A home rule municipality having a population in excess of 500,000 (Cook County) may impose a prepaid wireless 9-1-1 surcharge not to exceed 9% per retail transaction sourced to that jurisdiction. The Chicago-imposed surcharge will take effect on the first day of the first calendar month to occur at least 60 days after the enactment of the change. The bill was signed on August 5, 2024; therefore, the 9% rate will take effect on November 1, 2024.
Telephone or telecommunications services.
On and after January 1, 2025, the definition of “prepaid telephone calling arrangements” is amended to include arrangements that are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. Prepaid telephone calling arrangements include the recharge of a prepaid calling arrangements, if, and only if, on and after January 1, 2025, the additional telephone or telecommunications services included in the recharge are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. The arrangement does not include a recharge that is not obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property.
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