A property tax is known as “ad valorem” tax. This literally means “according to value” and property tax, therefore, is assessed based on a piece of property’s value.

The property tax in Illinois is imposed by local government taxing districts, such as school districts and municipalities, and it provides major tax revenue for them. It is the “largest single tax in Illinois.”1

Officials within local government taxing districts are responsible for administering and collecting property taxes. These officials include township assessors, county assessment officers, local boards of review, and county collectors.2


Illinois Department of Revenue, The Illinois Property Tax System, A General Guide to the Local Property Tax Cycle, (PTAX-1104).

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The basic framework for local government is established by the Illinois Constitution. The Illinois Compiled Statutes detail the manner in which such units of government are to be organized and established.

Local government taxing districts include counties, school districts, municipalities, fire districts, sanitary districts, park and library districts, and mosquito abatement districts. Illinois has more local governments than any other state by far. It currently has nearly 7,000 independent governmental units in operation. According to the 2012 Census of Governments by the U.S. Census Bureau, Illinois currently has:

  • 1,298 Municipal governments. Municipal governments in Illinois include the cities, villages, and incorporated towns.
  • 1,431 Township governments. 85 out of 102 Illinois counties have township governments in Illinois.
  • 3,227 Special District Governments. The creation of special district governments is authorized by statute and includes airport authorities, the Chicago Transit Authority, housing authorities, hospital districts and many more.1
  • 852 School Districts.2 There are a number of school district in Illinois that are recognized as governments. These include: Chicago Public Schools district; Common school districts; Community college districts; Community high school districts; Community unit school districts; Non-high school districts; Special charter districts; and Township high school districts.

In Illinois, property taxes are collected and spent at the local level by local government taxing districts.3

Illinois does not have a state property tax.

MEDIAN PROPERTY TAXES PAID BY COUNTY
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Source: U.S. Census Bureau, 2015 American Community Survey 5-year estimates

 


1 U.S. Census Bureau, 2012 Census of Governments, Individual State Descriptions: 2012, U.S. Government Printing Office, Washington, DC, 2013

2 Illinois School Board of Education, School Business Services Division, School District Reorganizations 1983-84 to 2017-18 (July, 2017).

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Property normally is divided into two separate categories, real property and personal property.

Illinois only taxes real property. This includes all property built on physical land such as real estate, homes, buildings, fences, and landscaping. It also includes areas that run beneath the land such as sewers and drainage systems.

Illinois does not tax personal property. This includes personal items and belongings such as such as furniture, automobiles and livestock.1

Taxes on personal property were abolished by the 1970 Illinois Constitution. Instead, the Legislature was directed to begin taxing individual districts, including school districts. Corporations, partnerships, limited partnerships, joint ventures, and similar entities, however, continued to pay personal property taxes until 1979. Now those entities pay a “replacement tax.”2 These taxes are placed into a “Personal Property Replacement Tax Fund” and are then distributed to local taxing districts.3


1 Illinois Department of Revenue, The Illinois Property Tax System, A General Guide to the Local Property Tax Cycle, (PTAX-1104).

2 Illinois Department of Revenue, Local Government, Personal Property Replacement Tax, http://tax.illinois.gov.

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Taxing districts are heavily dependent on property taxes. Nearly 7,000 taxing districts1 use them to fund most of the services local governments provide. This includes paying for employee salaries, pensions and debt service.

Two-thirds of a typical property owner’s tax bill goes to support school districts in Illinois.

The chart below illustrates all the different local governments supported in a typical property tax bill for a Chicago resident:

Distribution of Chicago Property Tax Expenditures (FY 2010)2
Distribution-of-Chicago-Property-Tax-Expenditures.jpg
Source: Civic Lab

A post by the Civic Federation3 explains how local governments vary in their revenue-spending approach. To demonstrate these differences, they focus on how tax dollars were proposed to be spent in FY 2015 in the City of Chicago, Chicago Public Schools, and Cook County:

City of Chicago Tax Levy: $862.9 Million4

The City of Chicago tax levy is used for four purposes:

  1. Debt-Service: This uses the largest portion of property tax dollars.
  2. Pensions: Employee pension costs were estimated to consume 41.4 percent of the total tax levy.
  3. Chicago Public Library: An estimated 9.4 percent is used for the library, which is a separate item on Chicago property tax bills.
  4. City Colleges Debt Service: The city has a Capital Improvement Program which initiates physical improvements, replacements, or maintenance of public infrastructure and public service-providing facilities. The city funds these projects with proceeds from user fees, bonds and taxes.5 The city levies 4.2 percent of the total levy to pay debt service on bonds for capital improvement of city colleges.
Distribution of City of Chicago FY 2015 Property Tax Revenues:
Distribution-of-City-of-Chicago-FY2015-Property-Tax-Revenues.jpg
Source: City of Chicago FY2015 Budget Recommendations, Summary B; via Civic Federation
Chicago Public Schools Levy: $2.2 Billion6

According to the Civic Federation, Chicago Public Schools’ property tax revenues are used for the following three purposes:

  1. 92.8 percent ($2.0 billion) is distributed to the General Fund to finance CPS operations.
  2. 4.8 percent ($106.4 million) is designated for the Workers and Unemployment Compensation Tort Immunity Fund.
  3. 2.5 percent ($55.2 million) is allocated for the Public Building Commission, lease, and debt service payments.
CPS FY 2015 Proposed Budget:
CPS-FY-2015-Budget.jpg
Source: CPS FY 2015 Proposed Budget. Interactive Reports, revenues and Expenditures, available at www.cps.edu; via Civic Federation
Cook County’s Levy: $741.6 Million7

In Cook County, property tax revenues are distributed amongst six funds:

  1. Corporate Fund
  2. Election Fund
  3. Public Safety Fund
  4. The Health Enterprise Fund
  5. Bond and Interest and Pension Fund
  6. Employee Annuity and Benefit Fund (Pension Fund)
Distribution of Cook County FY2015 Property Tax Revenues
Distribution-of-Cook-County-FY2015-Property-Tax-Revenues.jpg
Source: Cook County FY 2015 Executive Budget Recommendation, Revenue Estimate, p.43; via Civic Federation

 


1 Andy Shaw, 7,000 Reasons for Illinois Taxes to Rise Up, Crain’s Chicago Business (Dec. 8, 2017).

2 Civic Lab, How do TIFS Work?

3 The Civic Federation, Where Do Your Property Taxes Go? (Apr.11, 2015).

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5 City of Chicago, Office of Budget and Management, Capital Improvement Program, https://www.cityofchicago.org.

6 The Civic Federation, supra note 2.

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The property taxing process is a two-year cycle.

First, an assessment of the property is conducted. During this assessment period it is “discovered, listed, and appraised”1 so its tax value can be determined. The value that is determined by January 1 of any given year, is the value that the property being assessed will be assigned.

If the property in question is farm acreage or a farm building, the review procedure for an assessment normally begins nine months in advance of the regular assessment process (nine months prior to January 1 of any given year).2


1 Illinois Department of Revenue, The Illinois Property Tax System, A General Guide to the Local Property Tax Cycle, (PTAX-1104).

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Property values are determined by local assessing officials, the local County Board of Review, and the Illinois Department of Revenue.1

These bodies are charged with ensuring that property assessments are fair and comply with legal assessment levels. Assessments are said to be “equalized” which means that a uniform percentage increase or decrease is applied to properties within a jurisdiction. It is the duty of the Chief County Assessment Officer to ensure that all assessments are “equalized.”2


Illinois Department of Revenue, The Illinois Property Tax System, A General Guide to the Local Property Tax Cycle, (PTAX-1104).

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All property assessments made by local assessing officials, as well as the Chief County Assessment Officer, are subject to review. The value they assign each property determines the rate at which it will be taxed. Taxes are paid by the property owners who sometimes pass those costs on to tenants. The value assigned also affects those who hold a future interest in property, also known as a remainder or contingent interest in property.

County boards of review have been established to determine whether the assessments provided by local assessing officials have been calculated in a uniform and fair manner and whether something has been overlooked or omitted. They also decide whether “homestead exemptions” should be granted.

Homestead exemptions are reductions in the equalized assessed values that are attached to each property. The Equalized Assessed Value (EAV) is not the same number as the “assessed value.” The assessed value of the property is a figure that is used to calculate the EAV.1

If property owners believe that their properties have been assessed in an unfair manner they may appeal to a County Board for review. In Cook County, that board is the Cook County Board Of Review. If, after the review, a property owner remains unsatisfied with the assessment and disagrees with the decision of the County Board of Review, the owner may appeal to the State Property Tax Appeal Board or to a circuit court.2

State equalization:

Once all property assessments have been made by local assessing officials in each county, the Illinois Department of Revenue further equalizes these assessments by issuing a state equalization factor. The state equalization factor is applied to each county.3


1 Illinois Department of Revenue, The Illinois Property Tax System, A General Guide to the Local Property Tax Cycle, (PTAX-1104).

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A tax levy is a formal request made by a local government or school district. The request sets out the revenue that is to be generated in a specific county by a property tax. This request must be sent by each taxing district to the county clerk by the last Tuesday in December. The county clerk then calculates the final tax rate needed to generate the amount levied by various local governments and determines the total amount to be raised from that year’s property taxes. That amount is payable the following year.

Prior to the levying process, taxing districts create budgets for local government units. These budgets are set by a small group of elected officials who hold hearings and are frequently approached by interest groups, nonprofits, advocacy groups, and affected taxpayers.

Since the property tax is a local tax, and is controlled by local governments, the residents of each taxing district have the right to set forth their opinions to try to direct a local government unit’s taxing and spending plans. The hearings for budget proposals are open to the public and must be published in a local newspaper.1

School districts and other local governments receive only the property tax dollars they requested in their tax levy.2


1 Brent Bohlen, Practical Guide to Illinois Property Taxes, Taxpayers Federation of Illinois (2004).

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The equalized assessed valuation (EAV) is the product of applying the state equalization factor to the assessed value of real property.

Assessed Value:

The value placed on real property for tax purposes and used as a basis for distribution of the tax burden amongst each property owner.1

State Equalization Factor/Multiplier:

Once a property has been assigned an assessed value, the state-issued equalization factor and deductions of the various exemptions (e.g., homestead) are applied. The state equalization factor is issued by the Illinois Department of Revenue (IDOR).

An equalization factor is a multiplier used as a tool to try to ensure that all property is brought to a uniform level of assessment.2 The equalization factor must be applied to local assessments of property in all counties to produce an equalized assessed value (EAV). The EAV of real property must equal 33⅓ percent of the fair market value of all taxable property in a jurisdiction, a process known as inter-county equalization. Each county is assigned its own individual equalization factor. 3

In order to determine the final equalization factor for each county, the IDOR compares the actual selling price of individual properties (over a three-year period) with the assessed value placed on those properties by the county assessor. This is then adjusted by the board of review. If the median level of assessment for all property in the county is less or more than one-third of its value as required by law, an equalization factor is applied so the assessment meets legal requirements.4

Cook County Equalization:

Cook County ordinance dictates that its assessment level is 10 percent of the market value. This applies to all residential property (homes, condominiums, apartment buildings of six units or less), vacant lots, and commercial or industrial property being developed in economically deprived areas.5

The assessment level for property owned by not-for-profit corporations, commercial property, and industrial property is 25 percent.6

The Cook County Assessor sets property assessments in Cook County. Once set, they are finalized by the Cook County Board of Review. These assessments are then equalized by the Illinois Department of Revenue (IDOR) as required by law.

The IDOR calculates the state equalization factor to ensure uniform assessment statewide and to bring “the total assessed value of all properties in Cook County to a level equal to 33 1/3 percent of the total market value of all Cook County real estate.”7


1 Illinois Department of Revenue, Local Government, Understanding Your Property Tax Bill, http://tax.illinois.gov.

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3 The Civic Federation, The Final Cook County Equalization Factor is 2.8032 (May 3, 2017).

4 Macon County, Illinois, FAQ, What is the Equalization Factor/Multiplier? http://www.co.macon.il.us

5 Illinois Department of Revenue, (Apr.27, 2017). Cook County Final Multiplier Announced [Press Release]. Retrieved from: http://www.revenue.state.il.us/AboutIdor/PressReleases/PR-2017-04-27.pdf.

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7 Cook County Clerk David Orr, (June 13, 2017). 2016 Cook County Tax Rates Released [Press Release]. Retrieved from: https://www.cookcountyclerk.com/sites/default/files/pdfs/2016%20Tax%20Rate%20Report.pdf.

The EAV is calculated in the following manner1 :

Step 1: Assessed Valuation—Local assessors across Illinois calculate the assessed values of properties using various value components such as sales information of comparable properties, location, square footage, etc. In Cook County, the Cook County Assessor's Office is responsible for valuing residential property in Cook County using a computer-assisted mass appraisal method.2

Step 2: The final property assessment is multiplied by the state equalization—the final multiplier, or equalization factor—and equals the EAV.3

Step 3: Once the EAV is calculated, any applicable exemptions are subtracted from the EAV amount:

Property-Tax-Equation.jpg


1 Illinois Department of Revenue, Local Government, Understanding Your Property Tax Bill, http://tax.illinois.gov (“The equalized assessed value, or EAV, is the result of applying the state equalization factor to the assessed value of a parcel of property. Tax bills are calculated by multiplying the EAV (after any deductions for homesteads) by the tax rate.”).

2 Cook County Assessor’s Office, How Residential Property is Valued, http://www.cookcountyassessor.com.

3 The equalization factor is certified by the Illinois Department of Revenue and each county is assigned its own equalization factor.

General Homestead Exemption1

The General Homestead Exemption is a tax exemption designed to reduce the taxable value of a homeowner’s primary residence.

For an annual exemption to be available on property, that property must be residential property that is either:

(1) occupied by the owners of that property as their principal dwelling place, or

(2) occupied as single-family residence by a person who has an ownership interest—legal or equitable—as a lessee.2

This exemption reduces the equalized assessed value (EAV) of a residential property up to a maximum of $7,000 in Cook County3 and $6,000 in all other counties.4

Long-time Occupant Homestead Exemption (LOHE) – Cook County Only:

This exemption also applies to residential property that is the primary residence of the homeowner. In order for property to qualify, an individual must:

a) be a qualified taxpayer,

b) have a total household of income of $10,000 or less and

c) must have occupied the property for 10 continuous years or 5 continuous years if assistance is received from a government or non-profit housing program to acquire the property.5

Homestead Exemption for Persons with Disabilities:

A person with a disability is granted an annual $2,000 reduction in the EAV of their residence. However, the residence in question must be their primary residence and must be owned and occupied by that person.6

Some other exemptions include:
  • Veterans with Disabilities Exemption for Specially-Adapted Housing
  • Standard Homestead Exemption for Veterans with Disabilities
  • Homestead Improvement Exemption
  • Natural Disaster Homestead Exemption
  • Returning Veterans’ Homestead Exemption
  • Senior Citizens Assessment Freeze Homestead Exemption (SCAFHE)
  • Senior Citizens Homestead Exemption
  • Senior Citizens Real Estate Tax Deferral Program
  • Non-homestead Exemptions for Religious, Charitable, or Educational Organizations

1 Illinois Department of Revenue, Property tax, Property Tax Relief - Homestead Exemptions, http://tax.illinois.gov.

2 A lessee is a tenant. A legal interest in property means holding legal title in that property, otherwise known as actual ownership. An equitable interest in property means holding equitable title in that property, which gives the holder of the equitable title the right to gain legal title to the property.

See Illinois Department of Revenue, supra note 1 (“Public Act 98-0007, which passed into law in 2013, increased the General Homestead Exemption (a reduction in the Equalized Assessed Value) amount from $6,000 to $7,000 for Cook County beginning with the 2012 tax year [property taxes payable in 2013]”). http://tax.illinois.gov.

4 Illinois Department of Revenue, supra note 1.

5 Id.

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Once the county clerk applies the state equalization factor and calculates the tax rate he or she is able to produce the amount of revenue each taxing district may levy legally.1 Following that, the clerk computes tax bills, abates taxes, and prepares books for the county collector. This process occurs in the second year of what is a two-year property tax assessment cycle.

Property tax bills are calculated and sent to residents twice a year. Once the property tax payments are received from property owners, they are distributed to the local taxing districts that levied them accordingly.2


1 Illinois Department of Revenue, The Illinois Property Tax System, A General Guide to the Local Property Tax Cycle, (PTAX-1104).

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