Cleveland grocery stores struggling to turn a profit could get assistance from new income tax credits City Council is considering.
Under a proposed law, certain Cleveland grocers could get a refundable tax credit of up to 100% of the municipal income tax withheld from employees’ paychecks. To access the funds, stores must demonstrate financial need and sell a certain percentage of fresh and nutritious food, among other things that qualify them as “good food retailers.” The goal is to support grocers who are “delivering a public good” to the community, said David Lukas, deputy director of Business Growth within the Cleveland Department of Development, at an Oct. 19 council committee meeting.
The move comes after Heinen’s grocery store departed downtown Cleveland, after $18 million in losses over 11 years. Multiple Dave’s and Giant Eagle locations have also closed throughout the city over the past decade.
“Grocery is in crisis. Urban grocers, in particular, are disproportionately at risk and targeted because of things like cuts to SNAP,” said Tom McNair, the city’s chief of Integrated Development, at the council committee meeting. “We know that if we do not do something here, we are about to start losing a multitude of grocers across the city.”
Council Member Richard Starr, who represents the Central neighborhood, which lost a grocery store in 2019, introduced his own resolution earlier this year to set up a “grocery access fund” for financing certain grocery projects.
Surveys of Cleveland food retailers this summer found nearly 60% of the store managers or owners reported a decrease or expected decrease in sales as a result of new SNAP work requirements, which were signed into law as part of the federal One Big Beautiful Bill in July 2025. Under the law, veterans, former foster youth, people experiencing homelessness and adults between 55 and 64 are required to work, volunteer or go to school in order to get SNAP benefits. At the same time, it barred refugees and other legal immigrants from receiving the benefit.
Between October 2025 and July of this year, SNAP enrollment in Cuyahoga County dropped by around 14,000 people.
The city’s department of public health and department of development introduced the legislation Oct. 5. It passed city council’s health committee Oct. 19 in a 3-to-2 vote. Some council members who voted for it said they typically wouldn’t seek to give out tax credits like these.
“Grocers are the exception,” said Austin Davis, who supported the legislation. “There’s … certain industries that are so socially valuable, that are going to the fabric of the community, that require all hands on deck to support.”
The credits are not likely to be massive. A grocer with an annual payroll of $250,000 would get about $6,250 a year. But dissenters said they are concerned about the potential loss of tax dollars. Rough estimates indicate that the tax credit could cost Cleveland between $500,000 to $1 million a year, city officials said. Council Member Tanmay Shah, who voted against the legislation, said that the effort might help existing grocers but isn’t aimed at bringing more in.
“If we’re trying to address this need, why isn’t the city stepping up to run a grocery store on our own?” Shah asked. New York City, under Mayor Zohran Mamdani, is seeking to manage several municipal grocery stores.
Dr. David Margolius, the city’s director of Public Health, responded that he’s concerned the city does not have the infrastructure to operate a well-run grocery store.
The legislation still needs to be voted on by the entire city council to pass.
What the tax credit provides
The city would distribute the tax credit like this:
First, the city’s public health department would evaluate grocers to see whether they are eligible. The city anticipates grocers submitting two to three years of financial documents to confirm the business is struggling to remain profitable, Lukas said.
“We want to intervene before they’re showing losses, if we can,” Lukas said.
Grocers applying for the tax credit would be assessed based on the following criteria, including whether they:
- Sell a minimum percentage of fresh, nutritious food — likely 40% of their products, Lukas said
- Accept SNAP and WIC
- Hire Cleveland residents
- Pay employees above the minimum wage
- Implement environmentally sustainable practices, such as energy-efficiency measures
- Donate excess food to food pantries or other organizations
- Obtain food and products from Ohio-based growers or producers
The Department of Development would then prepare a recommended tax credit and bring it to the City Council, which would vote on each credit the city passes out.
The tax credits could last up to two years.
Cleveland hopes to shore up longer-term fund to support grocers
City leaders said the tax credit itself is not enough. They ultimately want to set up a pot of money grocery stores can apply to for equipment, renovations and operations support.
The city doesn’t know exactly where that money will come from, but Lukas said staff plan to apply for state, federal and philanthropic grants to seed the fund. The new tax credit the city is considering may help their grant applications by showing funders that the city, too, has “skin in the game,” he added.
The city also hopes to expand the program to attract new food retailers instead of focusing on existing ones.
McNair said the city is doing its best to use its tools to keep Cleveland’s grocery stores in business. But the root of the problem, he said, is population loss.
“You actually want to solve the grocery problem?” McNair said. “… We need more people living in the city of Cleveland. We need density. We need people of higher income living in the city of Cleveland. Because that is what grocery stores are looking for.”
