Illinois sales taxes 7th highest in U.S.

Illinois’ combined state and average local sales tax is the seventh highest in the nation. It is the highest among the most populous states.

Illinois shoppers pay one of the nation’s highest tax burdens at the store, with the Tax Foundation calculating a combined state and average local sales tax ranking seventh highest in the nation.

Illinois’ significant tax burden influences consumer spending habits and business operations. Research indicates shoppers make major purchases where taxes are lowest: Chicago shoppers head to the suburbs to avoid the city’s 10.25% sales tax rate.

States ahead of Illinois in the rankings have smaller populations. When it comes to the 10 most populous states, Illinois is No. 1.

Illinois lawmakers recently eliminated the 1% statewide grocery tax as part of the record-setting $53.1 billion state budget for fiscal year 2025, but the tax is in effect until Jan. 1, 2026. Removing the 1% tax will help Illinois families as their state is one of only 13 states in the nation with a grocery tax and the only one among the 10 most populous states.

The bad news is local municipalities can reinstate the grocery tax without voter approval. River Forest expects to institute a local grocery tax equal to the one the state is phasing out, and Highland is also considering implementing a grocery tax when the statewide tax ends.

Although it expects to lose $1 million in grocery tax revenue just like neighboring River Forest, Oak Park leaders are figuring out how to live without taxing families’ food.

High sales taxes combined with the nation’s second-highest property taxes makes Illinois an unattractive place for families to plant roots.