Have you noticed changes at your Arkansas supermarket checkout? If not, you will soon. A new law took effect on January 1 that alters how grocery taxes work in the state.
The Grocery Tax Relief Act, introduced by Governor Sarah Huckabee Sanders in March, aims to eliminate the “regressive tax” that many believe burdens families trying to afford food. This change comes as many are feeling the pinch from rising prices due to inflation.
Previously, Arkansas had a state grocery tax of 0.125%, but now it is zero for eligible food items. However, it’s important to note that local taxes still apply. For example, in Little Rock, the total tax rate is 8.63%: 6.5% for the state, 1% for Pulaski County, and around 1.13% for the city. This means while a bag of apples might become tax-free, a chocolate bar—classified as candy—will still incur full local taxes.
Arkansas isn’t alone in this effort. Illinois also removed its state grocery tax starting January 1. Governor J.B. Pritzker emphasized that every little bit helps families manage their grocery budgets, echoing concerns felt nationwide. In Illinois, a tax on groceries was reduced from 1% to 0%, though local taxes on prepared foods and beverages still apply.
Considering a family of four spends just over $13,000 annually on groceries, eliminating 1% could save them about $130 each year. But it’s worth noting that over 150 Illinois communities still impose local grocery taxes, meaning many families will continue to pay extra at the register.
So, what does this mean for shoppers? In Arkansas, consumers will pay less for staples like fruits and vegetables. Businesses will need to adjust their systems to comply with the new tax rules. While Arkansas has shifted from a very low state rate to zero, the situation in Illinois reflects a similar intent but varies due to local taxes.
Ultimately, the aim is to ease the financial strain on families while allowing local governments to maintain revenue. As more states consider similar measures, the impact on household budgets could be significant, reflecting a growing trend of states reevaluating grocery taxes amid economic pressures.
