Due to better-than-expected revenue projections and escalating inflation, the state of Illinois paused the annual increase in gasoline taxes and its tax on grocery items for a period of time, but both levies will make their return in 2023.
In fact, the inflation-based gas tax increase could occur twice within a six-month span, according to officials, while the grocery tax will return in the summer.
Here’s what you need to know.
Jan 1: Gas Tax Increase Goes Into Effect
As part of the state’s 2023 fiscal year budget, a mandatory increase in the gas tax that was tied to inflation was delayed by six months.
That increase was slated to cost motorists 2.2 cents per gallon, but under terms of the legislation, the new percentage was calculated by using the amount the Department of Labor’s Consumer Price Index for All Urban Consumers (CPI) increased over a 12-month period ending on Sept 1
That number turned out to be 8.2%, and as a result, Illinois motorists will see a fuel tax increase of roughly 3.2 cents per gallon, bringing the state’s total fuel tax on unleaded gasoline to 42.4 cents per gallon.
July 1: 2023 Gas Tax Increase Goes Into Effect, Grocery Tax Returns
The annual inflation-based increase in the state’s gas tax goes into effect on July 1 each year because of the Rebuild Illinois infrastructure bill, which passed the General Assembly in 2019.
Prior to that, the state’s gas tax had been locked at 19 cents per gallon for nearly 20 years, but that bill increased the tax to 38 cents per gallon in an effort to fund infrastructure projects around the state. Annual increases were also put into place with the bill, with the tax tied to the CPI’s annual increase.
Under the terms of the state’s 2023 fiscal year budget, the tax increase for fiscal year 2024 will still go into effect, meaning that motorists could see two fuel tax increases in the same year.
That budget also suspended the state’s tax on grocery items for a period of one year, but that 1% tax will return on July 1, 2023.
The tax was suspended for 12 months on items that included “food for human consumption that is to be consumed off the premises where it is sold.”
Alcoholic beverages, soft drinks, candy and food prepared for immediate consumption were not included in the grocery tax suspension.