A friend and I have written and illustrated a children's story about a group of kid witches that includes a girl with a hijab. I have read that magic and witchcraft are taboo in Muslim faith, should we change the character to not wear a hijab? There is nothing denominational about the magic our witches practice, it is like cartoon fantasy magic. Would this still be seen as taboo? If any Muslim readers could weigh in we would definitely appreciate it! We would like to be inclusive by including a hijabi character but not if it goes against her faith.
Islam in not a monolithic belief, and has many different branches: Sunni and Shia being the largest.
Magic is at least an allegorical element of Sufism, a mystical branch of Islam. The Rubaiyat by Omar Khayyam evokes magic. It also talks about wine, women, and song. But, Islam forbids drinking wine and relations outside of marriage. While the Rubaiyat has been also called the Hedonist's Bible, Khayyam was writing metaphorically, using forbidden things as stand ins for the importance of embracing life and love. Similar his reference to magic is considered a stand-in for a spiritual journey.
Also, there are cultural elements to magic as it pertains to Islam. Arabs have traditions of Efreet, and Indian Muslims and South East Asian Muslims have traditions of Naga and Rakshasa.
In short, your story idea has a very rich and diverse cultural world to draw from, with regards to magic and observant characters.
It would be offensive to include magic at all, and it would also be offensive to remove such a dress where it had been planned to exist before. In the most widely accepted interpretation amongst scholars of Islamic law, it is forbidden for any teenage or older male Muslim to look at strangers of the opposite sex if any part of the body besides the face and hands is shown.
My suggestion would be, as a Muslim, to somehow alter the story not to include magic, or write something else more down to earth if you plan to appeal to Muslim children as well. As for solving the problem with the illustrations, you could at least in future works either include male characters only, or not include illustrations at all, bypassing the issue.
Try reading the Rivers of London series by Ben Aaronovitch. It’s an urban fantasy series featuring tons of magic and one of the main characters wears a hijab, is a police officer, and is more than just aware of magic, she can practice it. After 10 or so novels, 3 novellas, a book of short stories and maybe a dozen graphic novels the series is still going strong. Write what you want and the rest of world be damned.