Illinois suspends grocery tax for one year — with certain exceptions

The State of Illinois is suspending sales tax on groceries beginning July 1 and continuing for a year through June 30, 2023.

The state announced the pause on its 1% sales and use tax on qualifying items, specifying that it applies to food items meant to be consumed off the premises of the location where it is sold — with certain exceptions.

“Food sold for consumption off the premises includes grocery items and packaged foods but does not include candy, soft drinks, cannabis-infused foods, and alcohol,” the Illinois Department of Revenue said in a bulletin, adding that food made to order for takeout or delivery does not qualify and is still taxed.

The state released a chart listing what items will not be taxed and which will continue to be taxed.

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For example, sandwiches prepared and placed in a deli case or other storage area will not be taxed, but sandwiches individually made to order will be taxed. Cheese, fruit, vegetable, or meat trays will not be taxed, even if they are made to order.

Deli counter items like prepared salads will not be taxed if sold by weight or volume and set out in containers.

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Candy is generally not covered by the suspension unless the listed ingredients include any kind of flour, in which case it is not considered candy. The state listed examples such as some types of licorice, cookies, snack mixes even if they include candy pieces, or even bags of assorted candy bars that are individually wrapped, as long as they at least some contain flour.

Items that do not qualify include medicines and drugs, as well as mouthwash and other hygiene products.

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The tax holiday comes at a time when high inflation is plaguing the nation. It is not the only measure Illinois is taking, as the state previously announced it is suspending the inflation adjustment to its motor fuel tax for six months. This will also take effect July 1.

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