Algonquin Looks At Ways To Recoup Repealed Grocery Sales Tax

ALGONQUIN, IL — Algonquin officials are starting discussions regarding the state's grocery sales tax, which will be nixed starting next year.

The village is anticipating a $1.9 to $2.1 million annual revenue loss from the change, Michael Kumbera, deputy village manager for the village of Algonquin, told Patch in an email response. The state's 1 percent grocery sales tax goes back to municipalities, but will be going away on Jan. 1, 2026. When the state legislature repealed the tax, towns were given the opportunity to keep the tax locally.

Last week, village staff presented information on the impact on the grocery tax repeal to Algonquin's Village Board.

"No action or formal direction was given at the meeting; however, multiple alternatives were provided for the Board to consider," Kumbera said.

Among the options are to:

• Do nothing: reallocate home rule sales tax from street improvement and natural area improvement funds to the general fund for operations. This would mean capital projects would not happen or be deferred.
• Enact a grocery tax: State law allows local governments to enact a local grocery tax. This must be approved and filed by Oct. 1.
• Home rule sales tax: City council could approve a .25 percent increase in the home rule sales tax, which would bring in an estimated $1.7 million annually. This must be approved and filed by Oct. 1.
• Property tax increase: A $1.9 million increase to the tax levy would increase the tax rate and add $146.77 to the bill of a median-valued home of $305,900.
• Locally administered tax: If directed, staff could look into other revenue options, such as food and beverage tax, pre-packaged liquor tax, utility tax and others.