St. Charles joins Geneva in continuing to collect 1% grocery tax in 2026

Choosing not to part with $2 million in possible revenue, St. Charles and hundreds of other Illinois communities will enact a 1% grocery tax in 2026, despite state lawmakers’ plans to eliminate the tax effective Jan. 1.

City Council members approved the ordinance in a 9-1 vote without discussion at the July 7 meeting. Alderperson Ryan Bongard cast the sole no vote.

St. Charles has several grocery stores, including Costco, Meijer, two Jewel-Oscos, Walmart, Target, Aldi, La Huerta and the newly opened Whole Foods.

In recommending the tax on groceries, City staff presented the ordinance as maintaining the “status quo” rather than enacting an additional new tax on residents.

While residents and business owners have suggested that getting rid of the tax would drive business to St. Charles stores, increasing sales and offsetting the loss of revenue, city staff said the loss of revenue would be too detrimental.

At a June Government Operations Committee meeting, finance director Bill Hannah said the city would lose about $2 million in annual revenue if it lets the tax dissolve, which he said would negatively affect public health and safety services the city provides.

Hannah said the city historically has used the tax to incentivize grocery store retailers to set up shop in St. Charles, citing past incentive agreements with Costco and Whole Foods.

Hannah also said a tax on groceries has more impact on out-of-town shoppers than St. Charles residents. He cited data on foot traffic the city collected through artificial intelligence, which he said showed only 27% of the area stores’ customers were St. Charles residents.

Mayor Clint Hull said it was ultimately the cuts to services that would be needed without the tax revenue that led to the decision.

“It wasn’t an easy decision,” Hull said. “It never is when you’re talking about trying to impose any sort of tax.”

Hull said the City Council wants to do anything it can to avoid imposing taxes, and the fact that this wasn’t a new tax was also a factor.

“Ultimately, the staff laid out, for the Council, the Implications of not continuing the tax,” Hull said. “With the cuts in services that would have to occur if we did [let the tax dissolve], that was the deciding factor.”

Under Gov. JB Pritzker’s plan to eliminate the statewide grocery tax, municipalities have until Oct. 1 to enact their own local taxes, which would take effect in January 2026.

The Geneva City Council also approved the same grocery tax ordinance July 7, joining municipalities including Batavia, Algonquin, Elburn, Burlington, Montgomery, North Aurora, South Elgin and Sugar Grove in the recent wave of Kane County towns to do so.