As the cost of everyday goods and services rises, most Americans are feeling added financial stress as they fill up their grocery carts. Using store loyalty rewards programs and coupons can help lower your grocery bill, but the savings only go so far when prices continue to climb.
Individuals and families in Illinois will soon get some relief when the state temporarily eliminates its tax on groceries. Find out what this means for residents of the state.
While paying state sales tax is the norm for most Americans, most U.S. states don’t charge taxes on groceries as they’re considered a necessity for survival. But some states require their residents to pay taxes on groceries.
Illinois is one of the states that impose a tax on groceries. Currently, the state charges a 1% tax on groceries, medicine, other drug items, and hygiene products. Other purchases are charged at a higher sales tax rate of 6.25%.
But soon, residents will get some relief in the checkout lane.
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The state’s grocery tax is no more starting on July 1
Beginning on July 1, 2022, Illinois will suspend its 1% tax on retail sales of groceries. This suspension will last through June 30, 2023. What does that mean for shoppers? Grocery purchases usually taxed at 1% will no longer be taxed.
This temporary tax change applies to food for human consumption that will be consumed off the premises.
f you purchase everyday grocery items to take home, they will not be taxed for a year.
What about other items purchased at the grocery store? Medicine, drug items, and hygiene products will continue to be taxed at the 1% tax rate.
Food packaged for immediate consumption, soft drinks, candy, and alcoholic beverages will continue to be taxed at the state sales tax rate of 6.25% plus any local taxes, if applicable.
The temporary elimination of a grocery tax could help all Illinois residents keep more money in their bank accounts. This change could make an even bigger difference for residents with a limited income.
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Other states are finding ways to help residents
The cost of living is on the rise throughout the country. Many state leaders are looking for ways to help residents through relief programs.
Kansas is another state that has a grocery tax. But recent legislation will phase out the state’s 6.5% grocery tax. Beginning on Jan. 1, 2023, the grocery tax will be lowered to 4%. In 2024, the tax will be reduced to 2% — and finally, it will reach 0% by Jan. 1, 2025.
Some states are finding other ways to help residents trim their spending.
Mississippi will gradually lower the state income tax beginning in 2023. Iowa residents will also see changes to the state income tax rate. By 2026, all residents will pay a flat-rate tax of 3.9%.
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While some of these changes won’t result in instant savings, they will likely make a big difference over time.
You’re not alone if you feel the financial strain of increasing costs. Most Americans are taking steps to reduce unnecessary spending, rethinking their budget, and looking for ways to save money on everyday expenses.
To improve your financial situation, check out these personal finance resources for more tips and guidance.
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