If you're a homeowner in Illinois, you're well aware of the financial burden that comes with property taxes. In fact, Illinois has the second-highest property tax rates in the country, with an average effective tax rate of 2.07%. That's nearly double the national average. On average, homeowners in Illinois pay around $4,800 per year in property taxes, but in some areas, that figure can exceed $6,000 per year.
One of the reasons for the high property taxes in Illinois is the presence of over 8,000 different taxing authorities. These property taxes support various local services and projects, including city and county governments, school districts, fire protection districts, sanitary districts, park districts, and even mosquito abatement districts. The multitude of taxing districts contributes to the complexity and high cost of property taxes in the state.
How Property Taxes in Illinois Work
Property tax assessments and collections in Illinois follow a two-year cycle. In the first year, local assessing officials appraise real estate to determine the market value of each home. The assessed value of most residential properties in Illinois is equal to 33.33% (one-third) of the market value. However, this percentage may vary in certain counties.
After the local officials calculate the assessed values, county boards review them to ensure accuracy. These boards may also equalize assessed values to address any discrepancies. Property owners have the opportunity to protest their assessed value before the county board, and if unsatisfied with the decision, they can appeal to the State Property Tax Appeal Board or the circuit court.
Additionally, Illinois employs an equalization factor to ensure that assessed property values are comparable between counties. This factor helps maintain fairness and consistency in property tax assessments.
Property Tax Exemptions in Illinois
Fortunately, there are several exemptions available in Illinois that can reduce assessed values and property tax payments. The most significant exemption is the General Homestead Exemption, which applies to homeowners living in their principal residence. In Cook County, the exemption allows for a $10,000 reduction in assessed value, while in other counties, it offers a $6,000 reduction.
Another important exemption is the Senior Citizens Homestead Exemption, which benefits homeowners who are 65 years or older and applies only to their primary residence. This exemption reduces assessed value by $5,000, except in Cook County, where the reduction is $8,000.
Property Tax Rates in Illinois
Property tax rates in Illinois are determined based on the total tax base, which is the total value of property within a district. Each taxing authority determines its levy in the second year of the property tax cycle, based on the tax base and its revenue needs. As a result, tax rates can change annually, depending on property values and revenue requirements, subject to voter approval.
To limit property tax growth due to rising property values, Illinois has the Property Tax Extension Limitation Law (PTELL). This law restricts property tax increases by capping revenue growth at the rate of inflation (as measured by the Consumer Price Index) or 5%, whichever is lower.
Despite these limitations, property taxes in Illinois remain high. Below is a table showing the average effective property tax rates for every county in the state.
Caption: Cook County, the largest county in Illinois, has an average effective property tax rate of 2.19%.
Let's take a closer look at some notable counties in Illinois and their property tax rates:
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DuPage County: With an average effective rate of 2.29%, DuPage County has one of the highest property tax rates in the state. Homeowners in this county pay around $7,221 annually in property taxes.
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Lake County: Located to the north of Chicago, Lake County boasts an average effective property tax rate of over 2.95%, the highest in the state. Homeowners here pay an average of $8,014 per year in property taxes.
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Will County: Will County, home to the city of Joliet, has an average effective property tax rate of 2.71%, more than double the national average. Homeowners with a $200,000 property in Will County can expect to pay around $5,420 in property taxes annually.
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Kane County: With an annual property tax payment of $6,777, Kane County residents face higher property taxes compared to the state average. However, it's still lower than neighboring DuPage County.
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McHenry County: McHenry County has an above-average effective property tax rate of 2.70% and a median home value of $234,000. Homeowners in this county pay approximately $6,329 in property taxes each year.
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Winnebago County: As one of the largest counties in Illinois, Winnebago County has the highest average effective property tax rate in the state at 2.88%. This county, which includes the city of Rockford, poses significant property tax costs for its residents.
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St. Clair County: St. Clair County has an average effective property tax rate of 2.05%. Homeowners here pay an average of $3,296 annually in property taxes.
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Madison County: With an average effective property tax rate of 2.05%, Madison County has lower property taxes compared to many other highly populated counties in Illinois.
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Champaign County: Home to Champaign, Urbana, and the University of Illinois, Champaign County has an average annual property tax payment of $3,920.
Understanding the high cost of property taxes in Illinois is crucial for homeowners and potential homebuyers. It's essential to consider these expenses when budgeting and planning for overall financial goals. Consulting a financial advisor can provide valuable insights and help navigate the complexities of property taxes in Illinois.
Remember, being well-informed is the first step towards making informed decisions regarding property ownership in Illinois.
