What Is The Property Tax In Illinois?

Whether you’re a current homeowner in Illinois or considering moving to the Prairie State, you might wonder how the property tax compares to other states, how it’s calculated, and more. But there’s no need to worry. Our team at Pasquesi Sheppard understands how overwhelming all the property tax laws can be, and we’re here to help you understand the property tax in Illinois.

What Is Property Tax?

Property Tax Written With Scrabble
Property Tax by Alan Harder is licensed with CC BY 2.0

An individual, corporation, or other legal entity pays property taxes on property they own. The local government calculates the property tax based on its value, including any buildings and land. The property owner must pay the annual tax. Property tax money is used to pay for local projects, such as sewer or water improvements, fire protection, law enforcement, and public education. It can also be used for highway and road construction, maintenance, and public libraries. Anything that benefits the community can receive money from property taxes.

Is Property Tax the Same As Real Estate Tax?

The terms property tax and real estate taxes are often used interchangeably, although they aren’t the same. Real estate taxes apply to any property, buildings, and land you own. In contrast, property tax can be applied to real estate and tangible property, such as vehicles and watercraft. The Tax Foundation reported that 43 states tax tangible personal property as of 2019. But both real estate and tangible property taxes are deductible with a Schedule A for your federal income tax.

How Does Property Tax Work?

Property tax starts with your local government. In Illinois, the local government determines its annual budget and how much funding is needed to cover the various taxing organizations and bodies, such as fire departments, forest preserves, school districts, special projects, and public libraries. This means that your tax rate is based primarily on the total tax base, how much revenue is needed to cover the expenses, or how much your municipality needs based on what they can get.

The amount of tax assessed on your property will vary depending on your local jurisdiction. The jurisdiction’s municipal government hires a tax assessor to place a value on your property. The assessor calculates your property’s value based on the fair market values of homes and properties in your area in the current tax year. This value is your home’s assessed value. The assessed value of your home and property is then multiplied by the property tax rate for your local municipality.

Most property taxes are calculated annually, meaning your property tax amount can vary yearly. Property taxes are almost all applicable to real property, which includes the home, fixed structures or buildings on the property, and the land.

Your local municipality will also create a payment schedule for your property taxes. Typically, you’ll have the option to pay in full or make payments to your county treasurer. However, if you disagree with the assessor’s determined value for your property, there are ways to discuss the estimate or formally contest your property tax. Failure to pay your property taxes can result in the taxing authorities placing a lien on your property. This lien will remain in effect until the taxes are paid and can complicate matters if you try to sell your property with a current lien.

How Does Illinois Compare to the Rest of the United States for Property Taxes?

According to WalletHub, Illinois has the eighth highest property tax burden at 3.8%, meaning that 3.8% of your income covers property taxes. And Illinois is ranked 10th for overall tax burden at 9.7%, meaning that almost 10% of your income covers property, revenue, and sales tax for the average Illinois resident.

Maine has the highest property tax burden in the United States at 5.48%, with Alabama featuring the lowest property tax rate of 1.41%. For total tax burden, New York is the highest at 12.75%, and Alaska has the lowest rate at 5.06%. The amount of taxes you pay varies greatly depending on where you live.

Who Is Eligible for Property Tax Exemptions in Illinois?

Illinois offers several exemptions to paying property taxes, so it might be worth checking out the rules and regulations of each of the exemptions to see if you qualify. The exemptions are aimed at assisting Illinois homeowners who meet one or more of the following qualifications:

  • Lease or own a home in the state as your primary residence and are responsible for the property taxes.
  • Are disabled.
  • Are a disabled veteran who adapted your home with federal funds to accommodate a disability.
  • Are a disabled veteran who leases or owns a home in the state as your primary residence and are responsible for property taxes.
  • Rebuilt or improved your home following a catastrophic event.
  • Rebuilt your home after a widespread natural disaster.
  • Are 65 or older and meet income requirements.

Basic Exemptions

As an Illinois homeowner, you may qualify for one of the primary exemptions, such as:

  • General Homestead Exemption.
  • Long-Time Occupant Homestead Exemption.
  • Homestead Improvement Exemption.

Disaster and Disability Exemptions

When a widespread natural disaster or a catastrophic event occurs, homeowners may qualify for an exemption based on the home’s equalized assessed value (EAV) in their first tax year versus the EAV the year before the disaster. And homeowners with disabilities can file Form PTAX-343-R and provide proof of their disability to qualify for a $2,000 reduction to their home’s EAV.

Veteran Exemptions

Three exemptions for property taxes are available for Illinois veterans:

  • Standard Homestead Exemption for Veterans with Disabilities.
  • Veterans with Disabilities Exemption for Specially Adapted Housing.
  • The EAV may be reduced by $5,000 annually for two consecutive tax years after returning from active duty.

Senior Exemptions

Illinois also offers exemptions for homeowners over the age of 65:

  • The Senior Citizens Homestead Exemption.
  • Senior Citizens Assessment Freeze Homestead Exemption.

It’s important to note that even if you qualify for more than one exemption, you may not be able to claim multiple exemptions in the same tax year.

For more information on property tax in Illinois or tax preparation services, contact our experts at Pasquesi Sheppard. We’re available from 8 a.m. to 5 p.m. Monday through Friday at 585 Bank Lane in Lake Forest, Illinois. Call us at 847-234-5000 or complete our secure online form to get started.