O’FALLON – An ordinance to keep a 1% sales tax on groceries in place to offset over $1 million in potential revenue loss is set for a final vote from the O’Fallon City Council.
The ordinance received a first reading at this week’s City Council meeting and is set for a second reading and vote for final approval at their next meeting on Monday, July 21, 2025.
The need for such an ordinance stems from the Illinois General Assembly’s vote in 2024 to repeal the state grocery tax effective Jan. 1, 2026. Since 100% of the proceeds from the state grocery tax went directly to local municipalities, O’Fallon joins a growing list of communities faced with either replacing the state grocery tax with a local version or finding another way to make up for the significant revenue loss.
“If the grocery tax is not retained, the General Fund would experience a loss of approximately $1.2 million per year,” according to the City Council meeting documents for July 7, 2025.
This loss would directly impact the city’s ability to fund its Police Department, street and pavement projects, and other projects and services which are paid for through the General Fund. Potential future expenses to the General Fund may include drainage improvements, widening of the Venita Bridge, improvements to Highway 50, streetscaping in the Downtown District, bike trail extensions, and the hiring of additional police officers.
The City of O’Fallon has until Oct. 1, 2025 to pass the ordinance in order to start collecting the replacement grocery tax by Jan. 1, 2026. The retention of this tax alone would have no effect on grocery prices, as the city is replacing an existing tax rather than imposing a new tax on residents.
Other Riverbend communities which have either passed their own replacement grocery taxes or are currently in the process include Alton, Belleville, Collinsville, Edwardsville, Fairview Heights, Freeburg, Glen Carbon, Highland, Jerseyville, Lebanon, Shiloh,Swansea, and Wood River. One exception is the Village of Godfrey, where village officials narrowly approved a 0.75% general sales tax increase instead of replacing the state grocery tax.
