Oswego village trustees appear to be in favor of the village implenting its own grocery tax in light of the state’s 1% grocery tax expiring on Jan. 1 of next year.

Like other municipalities, Oswego receives a share of that tax. The village received $967,000 in grocery tax revenue in 2024 and is expected to receive at least $1 million in grocery tax revenue in 2025.

That includes revenues from convenience stores. Municipalities that want to implement a 1% local grocery tax that would take effect on Jan. 1 should adopt an ordinance prior to Oct. 1 to ensure timely filing with the Illinois Department of Revenue, Oswego Finance Director Andrea Lamberg said at the Sept. 2 Oswego Committee of the Whole meeting.

Oswego village trustees are set to vote on the issue at their next meeting on Sept. 16. They will also continue discussion on how the revenues should be used.

Neighboring communities Montgomery, Yorkville, Plano and Sandwich have approved a 1% local grocery tax. Oswego’s grocery revenue currently goes to the village’s general fund, where it supports general operations and functions such as police service and public works divisions, Lamberg said.

“It’s estimated that approximately 50% of groceries sold in Oswego are sold to non-residents,” she said. “So this keeps some of the pressure off homeowners and renters by providing at a minimum, half a million dollars per year of non-resident grocery tax revenue.”

Oswego Village President Ryan Kauffman has suggested directing half of the grocery tax – $500,000 – to the water and sewer fund and to use those funds to provide an annual credit of $50 to resident utility accounts.

“I want to make sure that we’re providing as much of a rebate to our residents as possible,” Kauffman said.

There are currently just less than 12,000 residential accounts, Lamberg said.

“It would require some set up and some additional work on staff’s side, but it is certainly something that we could do,” she said.

The grocery tax in Illinois refers to the 1% sales tax on groceries that has been in place since the 1990 sales tax reform. The 1990 reform eliminated state taxation on groceries but allowed for a 1% grocery tax distributed to local governments. The proceeds of the tax are distributed to local governments by the state.

Kauffman noted the village board is not looking at increasing the tax.

“We are not discussing a single cent in increase to our taxes,” he said. “This is solely about keeping a tax that has been around for 35 years and that residents have been paying for 35 years.”