- Home
- Living & Visiting
- Environmental Sustainability
- Single-Use Bag Tax
- Single-Use Bag Tax for Businesses
Single-Use Bag Tax for Businesses
Starting January 1, 2024, around 50 retail stores in Northbrook will be required to charge a $0.10 tax on each paper or plastic single-use bag provided at checkout.
This is a retailer guide to compliance with the Single-Use Bag Tax ordinance, including:
- Steps for reporting and remitting the bag tax you collect
- "How to" sheet
- Monthly report form, to file by mail or in person
- Link to make monthly online payments and reporting (coming soon)
Remit Bag Tax
- Signage and printable resources
- Single-use bag tax overview and FAQs
Thank you for helping to make Northbrook cleaner and greener!
Overview
Northbrook, Illinois Municipal Code Chapter 23, Article X, Carryout Single-Use Bag Tax
On February 7, 2023, the Village Board of Trustees adopted Ordinance No. 2023-12: An Ordinance Amending Chapter 23 of the Northbrook Municipal Code, as Amended, to Establish a Carryout Single-Use Bag Tax. The ordinance follows Northbrook's Climate Action Plan (CAP), which aims to reduce waste and phase out single-use plastics. The implementation of this action brings Northbrook closer to CAP goals by minimizing impacts of pollution, water use, greenhouse gas emissions, and litter.
- Bag Tax Basics
- Definitions
- Exemptions
- Additional Requirements
- Collection, Retention, Remittance
- Penalties and Violations
Overview of the Policy:
- Beginning January 1, 2024
- A tax of $0.10 for the customer for each carryout single-use bag that a covered business provides
- Businesses will retain $0.05 to cover administrative expenses
- The Village’s portion of funds will be allocated to a Sustainability Fund
- Carryout single-use bag: any paper or plastic shopping bag provided to a customer during sale, pickup, or delivery to carry purchased items. Includes compostable and biodegradable bags.
- Covered business: any retail store whose square footage is 3,000 feet or greater.
- Retail establishment: retail store not licensed as a food business, but whose activities may consist of buying, selling, storing, handling, or dealing in one or more of a variety of goods.
- Reusable bag: a bag with handles that is designed for multiple uses and is made of cloth, fiber, or other machine washable fabric.
- Retailers will not need to charge the tax for:
- A bag provided by a pharmacist that contains a prescription drug
- Any newspaper bag or bag intended for use as dry cleaning, garbage, pet waste, or yard waste
- A bag provided at a seasonal event, such as a farmers market, yard sale, etc.
- A bag used to package a bulk item or to wrap a perishable item
- A bag used to package carryout food from a food service establishment
- Exempt customers: customers that participate in a federal food assistance program (e.g. Supplemental Nutrition Assistance Program [SNAP] and Women, Infants, and Children [WIC]) or an Illinois food assistance program.
- Exempt businesses: retail stores under 3,000 square feet.
Every business must display at least one sign outside or inside of the business, viewable by customers, alerting customers of the Village’s single-use bag tax. Stores may either use the Village-provided sign, or create their own. Minimum requirements for signage will include a statement that by local ordinance, the store is required to charge a 10¢ tax on each single-use bag provided at checkout.
Collection
- Collect the amount of tax imposed ($0.10 times the number of bags) when the customer makes any payment for goods.
- The business must indicate on the customer’s receipt:
- the number of carryout bags that the business provided to the customer and
- the total amount of tax collected.
Retention
The business may retain $0.05 from each $0.10 tax that they collect. The business must hold the funds from the tax for the Village until remittance.
Remittance
- On or before the 20th of each month, each business must remit to the Village the full amount of the tax collected for all carryout single-use bags during the previous month, less the amount retained by the business.
- These remittances must be accompanied by a report of all transactions subject to the tax. The report must contain:
- the number of bags supplied to customers
- the amount of tax required to be collected.
- If the business does not file a report and remit the required funds by the 20th, the finance director at the Village will estimate the amount of tax due and require the business to pay the estimated tax, in addition to any interest and penalty.
- If the tax is not remitted when due, a penalty of two percent per month on the amount of tax that remains unremitted will owed by the business in addition to other penalties.
- Any person that violates the ordinance will be fined at least $150.00 for each failure to collect or remit the tax.
- In addition, the Village Manager may revoke or suspend a business’s business license if the Village Manager determines the business has failed to comply with the Single-Use Bag Tax ordinance.
- Why are single-use bags a concern in Northbrook?
-
Plastic bags are very difficult to recycle (they should not be put in recycling carts or recycling dumpsters) and cause damage to recycling facility equipment. They are the number one source of contamination to our recycling collection in Northbrook, and recycling that is contaminated with bags are sent to landfills instead of sorted. Plastic bags take up space in landfills, litter our community, block storm drains, and endanger wildlife. Paper bags can be recycled, but they need a very large amount of water and energy to produce.
- What is the reason for the tax on single-use bags?
-
The Northbrook Village Board of Trustees adopted the tax on single-use bags to reduce environmental impacts and cost to the Village caused by single-use bags. Numerous studies have shown that a mandatory tax on single-use bags significantly reduces the number used.
- How much is the tax?
-
The tax is ten cents ($0.10) per single-use bag (plastic, paper, or other material including but not limited to compostable material) provided at the checkout.
- What stores are required to collect the tax?
-
All retail stores within Northbrook whose square footage is 3,000 feet or greater must charge the tax. Examples of these types of stores include, but are not limited to: convenience stores, department stores, retail chain stores, hardware stores, and grocery stores.
- Which stores are not required to collect the tax?
-
Restaurants, beauty salons, auto mechanics, and dry cleaners are not required to charge the bag tax. Stores whose square footage is less than 3,000 feet are not required to charge the bag tax. Sales at seasonal events, including farmers markets or yard sales, are also not required to charge the tax.
- Is the single-use bag tax subject to sales tax?
-
The tax is not subject to sales tax. Retailers should NOT be applying the sales tax rate to the single-use bag tax that is charged.
- Are signs about the bag tax required to be on display in stores?
-
Yes. Retail stores required to collect the bag tax must display a sign viewable to customers inside or outside the store, alerting them to the bag tax. Stores may either use the Village-provided sign, or create their own. Minimum requirements for signage will include a statement that by local ordinance, the store is required to charge a 10¢ tax on each single-use bag provided at checkout.
- Must stores charge all shoppers the bag tax?
-
All customers must be charged except those who provide proof of participation in a federal or state Food Assistance Program. Examples of Food Assistance Programs include EBT, SNAP, or WIC. Customers will need to volunteer this information to become exempt.
- How can shoppers avoid the bag tax?
-
Shoppers can avoid paying the ten cent bag tax by bringing their own bags, including reusing disposable bags that they already have, or refusing a bag when they make a purchase.
- Are some types of bags exempt from the tax?
-
Yes. The tax on single-use bags does not apply to any bag brought into a store by a customer, nor does it apply to packages containing multiple bags for food storage, garbage, pet waste, or yard waste. Additionally, the tax does not apply to:
- Bags provided by a pharmacist that contain a prescription drug
- Any newspaper bag or bag intended for dry cleaning
- Bags provided at a seasonal event, such as a farmers market, yard sale, etc.
- Bags used to package a bulk item or to wrap a perishable item
- Bags used to package carryout food from a food service establishment
- Does the tax apply to bags used for delivery orders or self-checkout?
-
Yes. The bag tax must be applied to each disposable bag (plastic, paper, or other material including but not limited to compostable material) used to deliver goods or provided at self-checkout. It is recommended that stores place notification of the bag tax at each self-checkout location. Printable materials for signage are available on this webpage.
Online ordering services are able to charge a card an estimated amount when the order is placed, then change this amount after the fact depending on how many bags are used.
- How is the ten cent tax monitored?
-
A retail store must record on a customer’s receipt the number of disposable bags (plastic, paper, or other material including but not limited to compostable material) provided to a customer and the total amount of tax charged for each type of bag. Please note self-checkout and online orders should also be subject to the tax.
The Village reserves the right to request that a retail store make its records available for compliance audits and can assess penalties for failure to comply with the ordinance.
- How and when do store owners report and remit the tax they collect?
-
Stores must pay the Village five cents ($0.05) for each ten cent ($0.10) bag tax collected. Bag taxes are due on the 20th of each month. Along with the tax, stores must submit a report.
- Is the single-use bag tax subject to sales tax?
-
The tax is not subject to sales tax. Retailers should NOT be applying the sales tax rate to the single-use bag tax that is charged.
- What type of information are stores required to report to the Village?
-
Stores will be required to report the number of disposable bags distributed to customers, the total amount of tax due, and basic contact information for the vendor.
- What happens to the portion of the bag tax proceeds kept by the Village?
-
The Village’s portion of the bag tax will be allocated to a Sustainability Fund. The Sustainability Fund is established to advance the implementation of the Northbrook Climate Action Plan (CAP) to foster environmental sustainability and reduce carbon emissions community-wide. This includes providing reusable bags for distribution to the community.