Arkansas’ grocery sales tax will end on Jan. 1.
The same is true in Illinois.
In Kansas and Oklahoma, shoppers stopped having to pay a state sales tax on groceries in January and August, respectively. Now fewer and fewer U.S. states continue to charge the tax, including Missouri and South Dakota, and several states have proposed legislation to do away with it.
Some worry about the lost state revenue without the taxes. But supporters on both sides of the political spectrum say the cuts are needed – especially as shoppers face expensive prices at the grocery store.
"Even with inflation cooling off, every dollar counts, so I'm proud we're doing what we can to make trips to the grocery store a little easier," said Illinois Gov. JB Pritzker, a Democrat, when he signed the state’s bill in August 2024. "It's one more important part of lifting the burden on Illinois families."
Republican Gov. Sarah Huckabee Sanders in Arkansas had a similar message earlier this year.
”The Grocery Tax Relief Act ends our state’s most regressive tax, the state Grocery Tax, and eases the burden on families just trying to put food on their tables,” said Gov. Sanders when the bill was introduced.
The amount of sales tax shoppers pay ranges from state to state. Arkansas’ state grocery tax is the nation’s lowest, at one eighth of a penny on the dollar. Meanwhile, Mississippi is one of the few states where groceries are taxed at the state’s full sales tax rate, in this case 7% – but legislation passed this year will lower that rate to 5% in July.
Impacts of grocery sales tax
Grocery taxes tend to hit people in low-income households most severely, especially when imposed on an essential item, like food, said Norbert Wilson, the director of Duke University’s World Food Policy Center. And they can increase the chances that a household will experience food insecurity.
That was the conclusion of a study that examined local food insecurity levels in relation to grocery taxes.. The research found that the average combined grocery tax rate of 4.2% in 2017 was responsible for a 3.3% increase in the probability of a household being food insecure.
“If you got rid of the grocery tax, would you get rid of food insecurity? No, you would not,” said Wilson, who was one of the paper’s authors. “However, they play an important role.”
Wilson said the impact changes when a household is able to buy food with Supplemental Nutrition Assistance Program (SNAP) benefits, which are not taxed. However, he said that SNAP benefits often don’t cover a family’s entire grocery expenses.
Some states with grocery sales taxes, such as Idaho and Hawaii, offer tax credits for groceries, but residents must apply for them.
In Arkansas, Sylvia Blain is happy to see the state’s grocery sales tax go. She lobbied for its elimination as the CEO of the Arkansas Hunger Relief Alliance, a group established by regional food banks to seek solutions to hunger.
“We all understand the need for taxes and what they benefit,” Blain said. “But I think when it comes to things that we all have to have to live, we might need to reconsider the way we tax them.”
Local revenue
South Dakota voters last year rejected a referendum to repeal the state’s 4.2% grocery tax. Opponents argued that repealing the South Dakota tax would cost the state too much in lost tax revenue, while others say the referendum’s vague wording might have repealed sales taxes on everything from cigarettes to toilet paper.
Local government’s dependence on grocery sales taxes is a major factor in Illinois. The 1% state tax was created in 1990 to provide revenue for municipalities, replacing a patchwork of local taxes, as well as the state’s sales tax.
Now that it will soon be ending, some city councils and village boards are exercising their option to enact their own 1% grocery tax.
In East Peoria, Illinois, the city council approved a local grocery tax unanimously in April. Many council members criticized Gov. Pritzker and the legislature for passing what they considered to be the elimination of a tax that cities could not afford to lose, forcing them to pass grocery taxes of their own.
“It was nothing more than a political stunt to place the burden back on local governments, and make us look bad,” East Peoria Mayor John Kahl said. “I don’t know that there’s too many local governments that cannot do anything but support extending this tax.”
Kahl predicts many, if not all Illinois municipalities would be enacting their own grocery sales taxes by the Oct. 1 deadline. The Illinois Policy Institute reported in January that 46 Illinois towns had already done so.
The repeal of state-level grocery taxes often leaves local grocery sales taxes still in place– and those can actually make up the lion’s share of the tax burden. Blain said there will still be local grocery sales taxes in some parts of Arkansas.
In Missouri, State Sen. Mary Elizabeth Coleman’s bill to end grocery sales taxes covers both the state’s 1.225% state tax and the often much-larger local taxes.
Amanda Berry submitted testimony in support of the bill, on behalf of the social justice advocacy group Empower Missouri. Berry said she also once struggled with grocery expenses as a single mother, and Missouri’s grocery taxes didn’t help. She said the average state and local grocery tax bill for a family in Missouri comes to $60 a month.
“Sixty dollars may, to a lot of people, not sound like a lot of money,” said Berry. “But $60 could be two weeks’ worth of gas money for me to get to my job, or it could be the copay for a doctor's appointment, or new shoes. There’s so many things that come up.”
At the same time, Berry said she’s mindful of how local governments depend on the revenue from their own grocery sales taxes. She would like to see a task force formed to come up with ideas for alternative sources of revenue. Those ideas could be useful in the future, since Berry thinks Sen. Coleman’s bill may not pass during the current legislative session.
This story was produced in partnership with Harvest Public Media, a collaboration of public media newsrooms in the Midwest. It reports on food systems, agriculture and rural issues.
