The city of Naperville may increase its home rule sales tax by 0.25% — for a total of 1% — on purchases made within the city for general merchandise and food for immediate consumption.
The move would help counteract funding lost from the elimination of the state grocery tax as of Jan. 1, 2026.
The potential change-up comes as the city council, on a narrow 5-4 vote, opted at its Tuesday, July 15 meeting in favor of a first reading of a home rule sales tax ordinance amendment of the municipal code to address an anticipated $6.5 million shortfall as the state-mandated grocery tax sunsets at the end of the year.
The other option under consideration had been the implementation of a 1% local grocery tax.
A second and final reading of the home rule sales tax ordinance amendment is slated to take place at the next council meeting Tuesday, Aug. 19. The tax would affect purchases of general merchandise items such as clothing, electronics, appliances, personal care products, as well as restaurant meals.
Potential tax change spurred by elimination of state grocery tax
The local debate comes on the heels of the Illinois General Assembly’s passage of a bill that ends the state’s requirement of a 1% grocery sales tax. Gov. JB Pritzker passed the bill into law last summer, handing the decision-making of the revenue source over to local municipalities.
Council members in favor of the home rule sales tax increase included Mary Gibson, Ian Holzhauer, Patrick Kelly, Ashfaq Syed, and Benjamin White.
Naperville Mayor Scott Wehrli supported the local grocery tax, as did councilmembers Allison Longenbaugh, Josh McBroom, and Nate Wilson.
Vote went against recommendation from staff and Financial Advisory Board
Finance Director Raymond Munch and other city staffers, as well as the Naperville Financial Advisory Board (FAB), favored a continuation of the 1% grocery tax, citing the stability it would provide to the bottom line as a revenue source.
“We analyzed the data during the last two recessionary periods, which strongly supported that theory,” Munch said of the stability factor. “During both the Great Recession and the global pandemic in 2020, sales tax categories that include grocery stores experienced growth … while other sales tax categories that would encompass the home rule sales tax declined.”
Another plausible reason for continuing the grocery tax, Munch added, would be an additional assurance if the city had to consider another revenue source in the future for an unforeseen reason.
“Setting aside the debate over the appropriateness of taxing food, the state’s elimination of the grocery tax created a significant financial burden for municipalities,” he said. “The issue highlights the financial vulnerability municipalities have to the state. It also raises the question of what options we retain if the state were to impose mandates or other revenue reductions without affording some level of local control in the future.”
Food insecurity concerns weigh on councilmembers
Proponents of swapping out the grocery tax with a home rule sales tax increase cited food insecurity concerns within the community.
Syed, who serves as a board member with the nonprofit Loaves & Fishes Community Services, noted the organization has been serving an increased number of people in recent years — to the tune of about 10,000 people weekly throughout the region.
“We have got multiple people who live in the city who definitely need support, who definitely need help,” Syed said. “We can help those people with not taxing them on groceries.”
Holzhauer, who suggested a two-year sunset provision on the home rule sales tax increase so it is reviewed again in 2027, said he, too, is concerned with the impact taxing essential items has on marginalized members of the community.
“One of the strongest arguments for the grocery tax is also one of the strongest arguments against it, which is it provides revenue stability during periods of economic slowdown,” Holzhauer said. “What does that really mean? That means in times when a lot of people are losing their jobs, when a lot of people are struggling to make ends meet, the only thing that they can afford to buy that week is their food.”
Gibson said she viewed the premise of a grocery tax being a stable revenue source as a possible cost to the broader community — particularly in challenging times.
“That stability for us would be on the backs of instability in our community, and I’m just not comfortable with that,” Gibson said.
Concerns of the impact on the municipal budget
But other councilmembers took a different stance and followed many of the same arguments FAB and city staffers made about the continuation of the grocery tax — particularly in times of uncertainty.
McBroom, who serves as the council’s representative on FAB, said potential revenue shortfalls from lower-than-anticipated taxes have real consequences, in terms of municipal operations.
“As far as revenue stability goes, these are things we have to pay for,” McBroom said. “People have to be protected, people have to have fire and paramedics come to their neighborhoods, and I don’t want to put that revenue source at risk with economic volatility and recession. I think that’s an important piece that I don’t think we’re talking about.”
Longenbaugh said she also viewed a continuation of the grocery tax as the most prudent move in a side-by-side comparison with the home rule sales tax increase.
“I’m not going to say that I’m in favor of the grocery tax, but I will be voting for that one, for the main reason being it’s been on our receipts since the 1990s,” Longenbaugh said. “It doesn’t necessarily make it right, but it’s something that we are familiar with already, and so for that reason, I will be voting for the grocery tax.”
Wehrli said he was concerned about unintended consequences from the tax swap, pointing to the impact it could have on the local business community and Naperville’s overall economic development efforts.
“I think doing the dance of potentially increasing home rule sales tax and hoping that doesn’t impact our community is more of a risk than it is a true solution,” Wehrli said.
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