Illinois To Waive Tax on Gas and Groceries in Bid To Lower Bills

Shoppers and drivers across Illinois will receive a little help at the tills and pumps, with the state set to scrap some taxes on groceries and gas.

The temporary initiatives are scheduled to begin on July 1. The grocery relief is due to last a year until June 2023, while the gas relief is scheduled to remain in place for six months until the end of this year.

The scheme is part of Democratic Governor J.B. Pritzker's plan to tackle the soaring prices and record inflation hitting the U.S. as a result of global issues, such as the war in Ukraine and the effects of the pandemic.

Illinois is one of the few states that impose a tax on groceries. It is set at 1 percent on food, medicine, and hygiene products. Other items, such as candy and alcohol, are charged at the usual, higher rate of sales tax of 6.25 percent. Though the 1 percent tax on food will be waived, medicine and hygiene products will still be subject to the 1 percent levy. Food packed for immediate consumption on the premises will still be taxed at the normal sales rate of 6.25 percent. The suspension of the 1 percent tax on groceries will last through June 30, 2023.

Officials say waiving the state's 1 percent sales tax on groceries will save the state's taxpayers up to $400 million in total through July 1, 2023, NBC Chicago reported.

For families, it will mean a small saving each time they shop for food, according to the Illinois Department of Revenue, which pointed out the current 1 percent tax on a family's grocery shop of $145.29 would add $1.45 to their bill. That money will now remain in their pockets and will gradually add up. Officials say waiving the state's 1 percent sales tax on groceries will save the state's taxpayers up to $400 million in total through July 1, 2023, NBC Chicago reported.

The state also plans to waive the inflation-increase on motor fuel tax, which had been due to increase automatically on July 1. However, the sales tax on gasoline will not be affected and will remain the same. The state's fuel tax will now be frozen at $0.39 a gallon through January 1, 2023, with taxpayer savings of $70 million in total.

Illinois' plans to help its residents financially amid the economic turmoil comes as part of the state's $46.5 billion budget that was passed earlier this year. The budget also included some spending portions, as well as the tax waivers, such as earmarking some $685 million to fund one-time direct rebate checks at $50 per individual and $100 per dependent, up to three, for individuals earning $200,000 or less or joint filers earning $400,000 or less.

The state's Republicans opposed some spending portions of the budget, although largely supported the various tax relief components, despite criticizing them as being temporary.

Senate Minority Leader Dan McConchie, who voted for the tax relief plan, said at the time: "This budget is nothing more than a campaign tool for Pritzker and the Democratic Party. Providing one-time checks to people in the mail right before their names appear on the ballot and expire right after the election is a disgrace."

But after announcing the budget had been approved back in April, Pritzker said: "We end this legislative session with enormous and historic victories for the people of Illinois: Gas, grocery, and property tax relief, more support for local government than ever before, a massive improvement in staffing for our nursing home residents, short and long term debt reduction, and a balanced budget for the fourth year in a row."

As reported by Newsweek, Pritzker had announced his tax relief plans in January as he fought a tough reelection campaign.