Naperville’s new 1% grocery tax is coming in light at the register, and city leaders are already talking about a pivot. Instead of counting on groceries to do the heavy lifting, officials are weighing a quarter‑point increase to the city’s home‑rule sales tax for the 2027 budget, a move they hope would steady the city’s bottom line after a rocky rollout.
Midyear numbers show a gap
City budget writers had penciled in roughly $6.5 million from the 1% grocery tax for the year. By June 30, Naperville had collected about $1.63 million, roughly 25% below the original projection. The city’s midyear report notes that monthly remittances climbed from about $511,000 in the first month to nearly $600,000 most recently, a sign officials say points to improving, but still incomplete, compliance. Finance staff warned that the shortfall will squeeze General Fund flexibility unless replacement revenue is identified and adopted, according to the City of Naperville.
Officials blame a mixed rollout by retailers
Finance Director Raymond Munch told the Chicago Tribune that some stores never updated their registers after the state scrapped its own grocery tax. “Many retailers heard the grocery tax was eliminated and didn’t follow local legislative process,” Munch said, leaving city staff to chase late filings. According to the Tribune, Naperville only began receiving remittances in April and is actively tracking businesses that still have not reported. In response to the sluggish start, council members asked staff to include a potential sales‑tax swap in upcoming budget work.
Swap would broaden the tax base
The alternative on the table is straightforward: raise Naperville’s home‑rule sales tax by 0.25 percentage points. Because Naperville is a home‑rule municipality, that change could be made without a voter referendum. The higher rate would apply to a wide range of purchases, including restaurant meals, clothing, electronics and personal care items, spreading the cost beyond grocery aisles. The mechanics, revenue tradeoffs and possible timing of a grocery‑tax repeal versus a sales‑tax increase are laid out in city council materials and staff reports, as outlined by the City of Naperville.
Deadlines, next steps and politics
Staff cautioned council members that missing the Oct. 1 filing window for a Jan. 1 effective date would push any change to the next implementation cycle, a delay that could cost the city about $3.25 million in the near term, as reported by the Chicago Tribune. The Illinois Department of Revenue sets the rules of the road for municipal grocery‑tax filings and the calendar for when local tax changes can kick in, so timing is not just a political issue but a procedural one.
Councilman Ian Holzhauer asked staff to plug the sales‑tax swap into 2027 budget projections. Councilmembers Mary Gibson and Ashfaq Syed backed that request, and the full council is expected to review staff’s revenue models as the next budget cycle ramps up.
What residents should watch
If the council ultimately trades the grocery tax for a 0.25% home‑rule sales‑tax increase, residents would likely see a small bump on a broader set of purchases, while the grocery line on receipts could be repealed or rewritten in city code. Staff plan to update revenue estimates and return to the council with revised projections this fall as part of 2027 budget development.
For meeting schedules, filings and municipal contacts, residents can visit the Naperville Municipal Center at 400 S. Eagle Street or check the city’s online budget materials, per the City of Naperville.
