Local Government (LTAD) Newsletter - July 2024

The Local Tax Allocation Division (LTAD) hosted its yearly local government workshop on June 12, 2024. The workshop covered important topics such as the tax location verification (TLV) process and provided a tutorial on where to find various valuable resources on the website. A recording is available on our Training Materials for Local Government Officials webpage.

The Personal Property Replacement Tax (PPRT) estimate for FY2025 will be posted in early August on our Estimate for Replacement Taxes webpage. Once it’s posted, we will send a notification via both MyLocalTax and IDOR News & Updates, our email/SMS text subscription service. Please refer to our May 2024 Personal Property Replacement Tax Allocation Statement for additional information on PPRT disbursements for FY2025.

HB 3144 (as enrolled) was passed by the Illinois General Assembly, and it is anticipated that it will be signed by the Governor and become law. Starting on January 1, 2026, this law will eliminate the state’s 1% tax on groceries. Under this new law, municipalities and counties may impose their own local grocery tax by ordinance. For municipalities and counties seeking to file a new grocery tax ordinance with LTAD, please file no earlier than April 2, 2025. To take effect January 1, 2026, these ordinances must be received by LTAD on or before October 1, 2025.

Please be aware that LTAD cannot provide specific statistics on low-rate grocery items. All low-rate items are reported together on Form ST-1, making it impossible to separate groceries from drugs/medical devices. Furthermore, we cannot provide a local government-specific number for the 2022-2023 grocery tax suspension credit. Those statistics were reported at the corporate level by retailers and not broken down by site.

To calculate your local government’s share of the state’s 1% tax on groceries, you may use our SIC reports. It’s important to note that businesses self-report their SIC code to IDOR. A business may sell groceries but not fall under a specific grocery code. Consequently, this reporting method should not be solely relied upon for an accurate assessment of the revenues that might be generated if you impose a 1% tax on groceries.

HB 3144 and SB 3362 (as enrolled) were passed by the Illinois General Assembly, and it is anticipated that they will be signed by the Governor and become law.

HB 3144 will remove the requirement that non-home rule municipalities must hold a referendum before they can adopt an ordinance to impose or increase the rate of a non-home rule sales tax.

SB 3362 will require retailers with a physical presence in Illinois, but who source sales out of state and fulfill those sales from inventory located out of state, to collect and remit ROT by destination. This will lead to an increase in sales tax allocations and a decrease in use tax allocations.

Public Act 103-0592 caps at $1,000 per month the amount retailers are authorized to withhold to reimburse themselves for the expenses incurred in keeping records, preparing and filing returns, and remitting tax to the Department. This means local governments will have more funds allocated to them!