Algonquin will add back 1% grocery tax when state tax ends, joining other McHenry County towns

Algonquin is the latest McHenry County municipality to implement its own 1% grocery tax, which will take effect at the start of next year when Illinois ends its version.

The Village Board approved the tax in a 4-1 vote Tuesday with one trustee absent. The tax will start on Jan. 1, 2026, the date of the repeal of the state grocery tax, which benefited local communities.

Trustee Bob Smith, who voted “no” on the matter, said he doesn’t like how the tax targets a necessity like food when families are struggling with higher costs across the board at grocery stores.

“We’re creating a new tax,” he said. “I’m opposed to creating new taxes, even if it’s 1% on groceries. I don’t like the idea that the state is trying to give a break, even though it’s not coming out of their pocket. It’s coming out of ours.”

Algonquin officials estimate that the grocery tax generates about $1.9 million to $2.1 million in annual revenue. The funds “directly support ongoing infrastructure improvements to streets, parks and natural areas,” Deputy Village Manager and Chief Financial Officer Michael Kumbera said in an email to the Northwest Herald.

Trustee Jerry Glogowski said he thinks “we have no choice in this matter. This money goes back to help our infrastructure growth, maintenance for our treatment plants” and more.

Gov. JB Pritzker signed a bill last year eliminating the state tax on grocery items. Many municipal leaders have criticized the move because the tax revenue funded local governments and its elimination does not impact the state’s bottom line.

Last year, Illinois lawmakers voted to give village boards of non-home rule municipalities the ability to adopt a general local sales tax without going to voters. Local governments have until Oct. 1 to submit ordinances to the Illinois Department of Revenue in order to avoid any revenue lapses from the tax.

Crystal Lake led the movement by implementing an additional 0.5% home rule sales tax last year, months before Pritzker announced the elimination of the statewide grocery tax.

The Marengo City Council approved its own 1% grocery tax in February. McHenry could be next as the City Council is expected to vote on the matter in the near future.