A new state fiscal year began July 1, ushering in reinstatement of a 1 percent tax on groceries and a second increase to the state’s motor fuel tax in 2023.

Amid record-high inflation last spring, the General Assembly temporarily waived Illinois’ grocery tax for the coming fiscal year and delayed the annual increase in the state’s motor fuel tax for six months. 

Democrats introduced both measures as part of a larger tax relief package that drew criticisms for its proximity to the November general election.

Inflation was approaching 9 percent when the tax relief plan passed last year, according to the U.S. Bureau of Labor Statistics, but it was 4 percent last month when the fiscal year 2024 was budget passed.

The motor fuel tax on gasoline, gasohol and compressed natural gas, meanwhile, increased by 3.1 cents on July 1 to 45.4 cents per gallon. The tax rate for diesel fuel also increased by 3.1 cents to 52.9 cents per gallon.

The automatic increase in the fuel tax at the beginning of the new fiscal year is an annual process that became law in 2019 with bipartisan support. Lawmakers doubled the motor fuel tax and indexed it to increase at the rate of the federal government’s Consumer Price Index each year.

The motor fuel tax revenue, combined with one-time increases to license and registration fees that took effect in 2020, provided the funding backbone of the state’s $33.2 billion six-year infrastructure plan for road and bridge upkeep, dubbed Rebuild Illinois.

Last year’s July 1 motor fuel tax increase was delayed six months, so the per-gallon tax already increased by 3.1 cents in January. Pritzker last year estimated the temporary pause on the gas tax hike would have saved consumers about $70 million.

(information courtesy of Capitol News Illinois)