To help ease the impact of inflation, the State of Illinois will suspend the 1.00% tax on grocery items starting July 1, 2022 through June 30, 2023. This applies to all Illinois residents and there is no income requirement.
Groceries tax at the low rate include food that is to be consumed off the premises where it is sold.
It’s important to note:
- This suspension does not apply to prepared foods ready to eat (i.e. food at self-service “hot bars”) and other food items taxed at the regular retail rate.
- The suspension also does not apply to medical goods taxed at the 1.00% rate.
- The RTA and the Metro-East Mass Transit District have not suspended their 0.75% tax which applies to groceries.
Grocery items that are eligible include:
- Frozen dinners
- Vegetables
- Bread
- Meat & seafood
- Dairy items
- Bakery items
- Cooked-cold or prepared cold foods prepared by the retailer
- For example, salads or wraps prepared by Jewel, sold at Jewel
The sales for which the grocery tax is suspended will be reported on the new Schedule GT with the ST-1 or ST-2 return.
There is also a notification to be either included on receipts or posted at the point of sale about this suspension. A printable sign will be available on the Department website tax.illinois.gov.
Retailers still need to collect and report all other sales tax as normal, including the 0.75% on groceries where the normal rate is 1.75%.
September 2022: Additional Guidance
The Illinois Department of Revenue (IDOR) has issued a reminder and additional guidance regarding the Grocery Tax Suspension.
However, there have been some issues with the proper reporting of the change in tax by businesses. Click here for detailed instructions on how to properly report the tax suspension.
Also, the Department issued a reminder that any grocery tax collected in error MUST be either returned to the customer or submitted to IDOR. The same is true for any sales tax collected in error, including excess collected due to using an incorrect rate. KRD advises clients to review their sales tax accounts to make certain they are not accidentally misreporting tax and retaining the excess funds. If you need instructions on how to report excess tax collected, please feel free to contact us.
Contact the Tax and Financial Planning Experts at KRD Today
If you have questions about the grocery tax suspension in Illinois, contact KRD today at 847-240-1040 or contact us online.
