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Illinois Suspends Grocery Tax Starting Today

The sales tax on groceries in Illinois will be suspended for a year starting Friday, under the state budget approved in April.


The state’s tax relief program will also postpone a gas tax increase until January, and cut school supply taxes from 6.25% to 1.25% from Aug. 5 to 14.


The measures are part of a $1.8 billion state tax-break deal signed by Pritzker in April. GOP leaders derided the measures as a campaign tool for Pritzker and other Democrats in an election year.


The plan also provides automatic $50 income tax rebates for individuals who made less than $200,000 in 2021, $100 for couples filing jointly who made less than $400,000, and $100 per dependent claimed in 2021, up to three.


Additionally, the Illinois state earned income credit will increase from 18% to 20% of the federal credit, and eligible homeowners will receive property tax rebates equal to their 2021 property tax credit, up to $300.


Illinois’ 1% sales tax on groceries will be suspended through June 30, 2023, which will net $400 million in consumer savings, the governor’s release said.


The state is one of just 13 in the nation that charges a sales tax for groceries.


Lawmakers across the country are enacting tax relief measures like the ones in Illinois, in part in response to inflation, according to Tax Foundation senior policy analyst Katherine Loughead.


The temporary elimination of the grocery tax represents “just a small amount of relief because there’s only a 1% levy on groceries as it is,” she said. “It will go back into effect July 1 of 2023.”


Illinois charged about 55 cents more per gallon for gas than the national average for Thursday, according to the American Automobile Association.


The state’s $0.39 gas tax rate was scheduled to increase on July 1, but now will not go into effect until 2023.

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