Following the state’s decision to eliminate the grocery tax, the Normal Town Council on Tuesday will consider an ordinance to replace it with an equivalent local tax. The new tax would begin in 2026, the same time the town will stop receiving state funding.
The town characterizes the new tax as a way to “maintain the status quo on grocery taxes” in Normal. Prior to the moratorium enacted on the grocery tax in 2022-23, the town received about $2.3 million in annual revenue from the state grocery tax that imposes a 1% tax on “grocery items,” including food, drugs, and medical appliances.
After the moratorium on the state grocery tax, the Illinois government “chose to make municipalities whole for the lost revenue,” directing other revenue to towns and cities. The original grocery tax of 1% resumed after the pandemic.
But in its last session, the state legislature decided to eliminate the grocery tax altogether. This means that on Jan. 1, 2026, Normal and all other municipalities in Illinois will lose this revenue stream without a source to replace it.
The town says the replacement grocery tax will help “allow the town to achieve its desired financial goals” if it is managed judiciously. The town reiterates it “has a strong history of effectively managing funds and investing in assets, and the proposed tax continues these efforts.”
The town refers to its recent investment in infrastructure and public spaces and amenities as evidence of its “judicious” use of taxpayer funds.
“For all practical purposes, the proposed ordinance continues the tax that already exists, continuing the status quo,” town officials said in its agenda for Tuesday’s meeting that is being held that day because of the Labor Day holiday on Monday. “The only difference is that the tax would be imposed under town ordinance rather than state statute.”
Town officials list many potential uses for the proposed tax revenue, including public art, historic preservation, smart city initiatives, park and trail improvements, and staffing and pension funding for public safety officials.
The Illinois constitution says a municipality may only approve a new occupation tax under certain conditions. The town says it has done this following “the provisions of the Municipality Grocery Occupation Tax Law.”
The law allows municipalities to do exactly what Normal proposes: effectively replace the state grocery tax with a local tax beginning on Jan. 1, 2026. Any municipality can do this prior to October of next year.
