Litchfield City Council Re-establishes Local Grocery Tax to Preserve Revenue

Litchfield City Council Meeting | Sept. 18, 2025

Article Summary: The Litchfield City Council voted to implement a 1% municipal grocery tax, effectively continuing a revenue stream that the state is eliminating. The decision, driven by a tight deadline and budget concerns, drew a split vote but ultimately passed.

Grocery Tax Key Points:

• Ordinance Passed: The council approved an ordinance implementing a municipal grocery retailers’ occupation tax and service occupation tax.

• Revenue Preservation: The tax replaces the 1% statewide grocery tax that is being eliminated by the state of Illinois effective Jan. 1, 2026.

• Budget Impact: The tax generates approximately $200,000 annually for the city, funds that are already accounted for in the budget.

• Deadline Driven: The city had to act by Oct. 1 to keep the tax in place; failure to do so would have resulted in a loss of revenue.

The Litchfield City Council voted on Wednesday, Sept. 18, 2025, to maintain a 1% tax on groceries, opting to enact a local ordinance to replace a state tax that is set to expire.

The measure passed with opposition, as Alderpersons Josh Hughes and Bert Holloway voted “nay.” However, the majority of the council supported the move, ensuring the city retains a critical revenue stream.

City Administrator Adam Pennock explained that the State of Illinois recently eliminated the statewide grocery tax but gave municipalities the option to reinstate it locally. The deadline to do so was Oct. 1.

“That money is included in the budget,” Pennock said. “If we do not approve this, we have to figure out where we’re going to pull $200-ish thousand from the budget.”

Mayor Jacob Fleming clarified that this is not a new tax increase for residents but rather a continuation of the existing rate.

“The tax is already in place. This is just keeping it going. We’re not adding a percent to anything,” Fleming said.

Fleming noted that he had spoken with other mayors in Montgomery County, including Hillsboro, who have already passed similar ordinances to protect their budgets. The tax applies to food for human consumption that is to be consumed off the premises where it is sold, aligning with the state’s previous definition.