Why Mundelein’s sales tax is increasing
Buying just about anything in Mundelein will cost more starting this summer.
The village board on Monday approved increasing the local sales tax rate a quarter of a percentage point to 1.25%. That means the overall sales tax in town will be 8.25%, up from 8%.
That tax is assessed on retail goods that aren’t grocery items, meals in restaurants, automobiles, recreational cannabis and more. It doesn’t apply to medical cannabis, prescription drugs and other exempt items.
The increase is a response to the planned elimination of the state’s 1% grocery tax, which could be effective July 1. Gov. J.B. Pritzker proposed getting rid of the grocery tax during his annual budget address last month, and the change is included in the proposed state budget for the next fiscal year.
Eliminating the grocery tax will cost Mundelein $500,000 annually, Mayor Steve Lentz said Monday night.
“(That) is very significant,” Lentz said. “That’s a lot of revenue.”
The board came up with the general sales tax increase because Illinois municipalities legally can’t create grocery taxes, Lentz said.
Increasing the village’s share of sales tax will generate about $700,000 in the 2025 fiscal year, which begins May 1. The revenue could be $1.2 million for a full year, village Finance Director Linda Miller said in a memo to the village board.
The additional revenue would begin arriving in village accounts starting in October.
If state leaders opt not to scrap the grocery tax, Mundelein officials will consider decreasing the village sales tax starting in January 2025. The sales tax can only be changed effective Jan. 1 or July 1 of each year, Miller wrote.
The increase passed with a 4-1 vote. Trustee Robin Meier cast the lone “no” vote, while Trustee Eric Schwenk was absent.
That the new tax will generate more money than the grocery tax does concerned Meier. She also doubted village officials will spike the sales tax increase if Pritzker and the General Assembly remove the grocery tax break from the budget.
“I have never seen a government put on a tax and then take it off,” Meier said.
Trustee Kara Lambert called the tax shift a “shell game” but supported the plan anyway.