Shoppers in Illinois will see a noticeable rise in prices starting July 1 as local sales taxes increase in dozens of communities. The hikes come at a time when many households are already under pressure from inflation and rising cost of living.
What’s changing on July 1?
Roughly 50 municipalities across Illinois will increase their local sales taxes, with new rates ranging from 0.25% to 2%, according to the Illinois Department of Revenue.
These hikes will apply to:
- Business district sales taxes
- County-level public safety, transportation, and mental health taxes
- County school facility sales taxes
- Home rule and non-home rule municipal sales taxes
When added to the existing 6.25% statewide base rate, some areas may see combined sales tax rates approach or exceed 10%.
Where are the biggest increases?
The communities with the largest scheduled hikes include Colfax, Danvers, and Hudson. The exact rate will depend on each locality’s updated rules, which residents can verify using the Illinois Tax Rate Finder tool.
Will groceries be affected?
No. While these sales tax increases apply to general merchandise, most groceries are exempt. Food, medical appliances, and prescription drugs will not see new local tax charges under this rule change.
However, Illinois is preparing another shift in grocery taxation. Beginning January 1, 2026, the state will remove its 1% tax on groceries. At that point, municipalities may opt to impose a new local grocery tax of up to 1%.
More costs coming
The sales tax hikes are part of a broader set of tax increases taking effect in Illinois this summer:
- Gas tax increases from 45 cents to 48.3 cents per gallon.
- Diesel tax rises from 54 to 55 cents per gallon.
- Sports betting tax adds a 25-cent fee per wager for the first 20 million bets, doubling to 50 cents afterward.
These combined changes could further strain household budgets—particularly for low- and middle-income residents.
Why it matters
Local governments use sales tax to fund essential services, but these hikes come amid already high inflation. The Tax Foundation reported that Illinois’ average combined state and local sales tax rate was 8.86% in 2024—one of the highest in the country.
For residents, the July 1 hikes could mean paying noticeably more on everyday retail purchases.
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