Local Government (LTAD) Newsletter - October 2024

House Bill 3144 was signed into law by Governor Pritzker on August 5, 2024, and has become Public Act 103-0781.

Starting on January 1, 2026, this law will eliminate the state’s 1% tax on groceries. However, 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. Sample ordinances for the Municipal Grocery Occupation Tax and County Grocery Occupation Tax can be found on our Forms and Agreements web page.

This legislation also removes 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. If you passed your non-home rule sales tax ordinance before August 5th, you must either send the results of your referendum along with your ordinance, or pass a new ordinance.

Note: Only municipalities imposing a new rate or changing an existing rate must send the ordinance to LTAD. Anyone with an existing non-home rule sales tax rate does not need to do anything, this legislation does not impact you.

Senate Bill 3362, was signed into law by Governor Pritzker on August 9, 2024, and has become Public Act 103-0983. Starting on January 1, 2025, this law 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.

When reviewing your allocation remittance reports, you may see a row that says “Hold Pending Review” with a negative amount. This negative amount indicates that a return is on hold while IDOR reviews and determines if it was filed correctly by the taxpayer. You’ll find the positive of the same amount on another row next to the name of the taxpayer associated with the held return.

Illinois law mandates that all local government units submit rebate sharing agreements electronically to IDOR. Using MyLocalTax, local governments must provide comprehensive details about new or existing agreements to share or rebate any portion of retailers’ occupation taxes generated by retail sales of tangible personal property. The law also stipulates that the reported information should be accessible to the public. For more information, see our Rebate Sharing Agreement FAQ’s.

Sign up for IDOR’s email/SMS text subscription service to receive the latest news and updates specific to municipalities, counties, and local taxing districts. Since the last newsletter, LTAD has used this service to send information on the FY2025 PPRT estimates and more. Sign up by visiting tax.illinois.gov.

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