Winnetka eyes 1% sales tax and 1% grocery tax

Looking for ways to fund the village’s Business District Revitalization Fund, Winnetka officials are considering implementing a local sales tax as part of the 2026 fiscal year budget.

Trustees discussed the sales tax, and other potential revenue ideas, during a Village Council study session on Tuesday, July 8.

Tim Sloth, the village’s chief financial officer, said that the proposed 1% home rule sales tax first came up in November 2024 when trustees were discussing the current fiscal year budget, and while trustees decided not to pursue it at that time, they said they were interested in discussing it further.

All revenue generated from the sales tax — an estimated $400,000 annually — reportedly would go to the Business District Revitalization Fund. Sloth added that implementing the 1% sales tax would eliminate the need to transfer money from the general fund.

Sloth said the sales tax would apply to most retail sales, which include online sales, but it would not include groceries, vehicles, prescriptions and most medical supplies.

He added that several nearby communities also have a 1% home rule sales tax, including Wilmette, Northfield and Highland Park.

The money generated from the proposed tax would help fund several upcoming planned projects throughout Winnetka, including the Hubbard Woods Streetscape ($10.96 million) and the post office plaza ($8.39 million).

And another 1

In addition to the sales tax, Sloth said village staff were seeking guidance on whether or not to implement a 1% local grocery tax, which would replace the expiring state grocery tax. The current statewide tax is set to be repealed on Jan. 1, 2026, and Sloth said the elimination of that tax would cause the village to lose about $205,000, or 10%, of its annual sales tax revenue.

Trustees had no objection to the local grocery tax, and Village President Bob Dearborn said it will be on the council’s next agenda for approval.

But while trustees generally offered support for the home rule sales tax, they said they wanted to spend more time discussing it before any vote to approve it. Specifically, they indicated they want to work with the business community to make sure they’re supportive of it.

“In fairness, (the sales tax) is something that I’m committed to,” Trustee Tina Dalman said. “But I also want to make sure that the businesses, the landlords, everybody has had an opportunity to go out and sit down (to learn more about it). I think it’s important that it’s given time.”

Trustee Scott Myers, who participated in the meeting remotely, said he’d like to know how other non-retail businesses would be impacted by a potential sales tax.

“How do those (retail) businesses that are carrying this burden feel about some people in the business district who are kind of getting a free ride, and what ideas do they have?” he asked. “I think having a dialogue and getting some input on this question is something that will benefit us come October.”

Trustee Rob Apatoff supported revisiting the sales tax, if it is installed, after five years to determine if it’s still needed.

“Otherwise this is another tax in perpetuity,” he said.

Village Manager Rob Bahan said it is possible to revisit the sales tax after a period of time. He also said that, if trustees support a sales tax, village staff will begin public engagement as soon as possible.

“We’ll take July, August and September to do that engagement,” he said. “We’ll begin planning the budget with the 1% but we’ll also have a contingency plan if there’s significant backlash and you feel like you want to hold back.”

Sloth said any final decision on whether staff will recommend the sales tax to the council would happen during budget workshops in October and November.

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