Municipalities in the Metro East have seen increases, or in some cases windfalls, of sales tax revenue in the first six months of 2025 compared to the first half of 2024 — which some experts and city officials believe could partially be attributed to Illinois starting to tax online sales.
At the start of the year, the state began taxing online retail sales when a product is shipped in from out of state. The result: extra tax revenue for local towns and counties over the first six months of 2025, according to state data compiled by the Taxpayers’ Federation of Illinois.
“It’s a good change from a local government (perspective), as it’s generating additional local revenue,” said Maurice Scholten, the nonpartisan advocacy group’s president. “It does add an additional layer of complexity to our overly complicated sales tax structure. So, I guess there’s good and bad.”
While the results have been mixed — with increases ranging from 0.48% to 67.52% across eight Metro East communities analyzed — all have seen increased receipts from the Illinois Department of Revenue, the data shows. However, it’s hard to know exactly how much this change in state tax code has fueled the uptick, the Taxpayer’s Federation and city officials said.
Inflation, cities introducing new taxes, new businesses opening or closing and residents' spending habits could all play a role in the increased sales tax distributions, they said.
At the top of the list, Edwardsville has collected roughly $4.78 million more in sales tax revenue the first six months of this year compared to last year. While other categories have increased too, the municipal tax collected by the state and distributed to the city has ballooned 72% — increasing from $4.09 million to $7.05 million over the same time period.
Cathy Hensley, spokeswoman for Edwardsville, said the city’s finance director and city attorney said there could be other factors at play.
“This could be a bit of an anomaly,” she said.
Collinsville City Manager Derek Jackson said the collection of sales tax on online retail transactions from other states is “good modernization.” While the entirety of the extra $1.88 million collected in the first half of this year compared to last may not be directly attributable to the change, it seems to have helped, he said.
“That change simply means that more of those tax dollars are staying local, supporting roads, parks and public safety in the community where they come from,” Jackson said. “I do feel like what the state has done here, and time will tell — again, this is year one so I don’t want to be overly optimistic — but it's a good example how policy change at the state level can have very tangible impacts at the local level.”
Exactly why there’s such a variation among Metro East communities is also hard to nail down. However, cities with wealthier tax bases could have more residents making online purchases taxed under the new Illinois code, Scholten said.
“To the extent that the people that live in a certain jurisdiction are more likely to spend more money online than the median Illinois citizen, they're probably going to be better off,” Scholten said.
Fairview Heights, a city heavily reliant on sales tax revenue, has seen the smallest increase of the Metro East towns analyzed at 0.48%. Home to the St. Clair Square shopping mall, Fairview Heights has relied on sales tax to fund a majority of its city services, and the city doesn’t collect a real estate property tax like most others.
Mayor Mark Kupsky said there are a few factors that could explain Fairviews Heights’ situation. The city’s coffers were hit hard during the pandemic when residents stopped most in-person shopping, and a number of businesses closed. The city has been recovering since, Kupsky said.
“That's why the online tax piece was so important, because people weren't going to brick and mortar, but they were ordering online,” he said.
In the past two years, Kupsky said Fairview Heights has observed more retail business return to in-person, though.
“As the economy stays favorable, I think you'll continue to see sales tax maintain and hopefully grow, not just because of new retailers, but because people are buying locally,” he said.
Local municipalities haven’t been the only entities to see increased sales tax receipts through the first half of 2024.
The Metro East Mass Transit District, which helps fund both the St. Clair County Transit District and the Madison County Transit, has also benefited. Like the municipalities, the transit district gets a portion of the sales tax.
Ken Sharkey, managing director of St. Clair County Transit, said the agency is projected to bring in about $29 million in sales tax revenue this year when $23 million has historically been collected. SJ Morrison, managing director of Madison County Transit, said MCT brought in roughly $1.1 million per month last year, and that’s up to $1.5 million this year.
The St. Clair and Madison county governments have seen increases of 9.5% and 27.7% in their collections the first half of this year, respectively.
This development comes after the deadline for municipalities to levy a 1% grocery tax that the state previously funneled to cities and villages passed on Oct. 1. Gov. JB Pritzker successfully lobbied against the state collecting a grocery tax, which many city government officials had said was essential to their budgets. Since then, a majority of Metro East towns have opted to bring back the tax starting Jan. 1, 2026.
