How is property taxed in Illinois?

Every three years, your local County Assessor figures out the “fair market value” of your property. The fair market value is how much someone might pay to buy it from you.

Next, the assessed value of the property is determined. For homeowners, the assessed value is 10% of the fair market value. For most commercial property owners, it's 25% of the fair market value. 

Then, the state equalizer is applied to the assessed value. This creates the Equalized Assessed Value (EAV) for the property. Exemptions can reduce the taxable value of the property. You may file up to 4 exemptions. These may include: homeowner residents, senior citizens, veterans, disabled veterans, those with disabilities, and home improvements. The remaining value (called the “Adjusted Equalized Assessed Value”) is multiplied by your local tax rate.

Here's an example from the Cook County Assessor’s Office of how a tax bill could be calculated. This example is for a home with an estimated fair market value of $100,000 and a local tax rate of 8%. 

$100,000    2019 Estimated Fair Market Value
X.10    Assessment Level (10% for residential properties)
$10,000    2019 Assessed Value
X 2.916    2019 State Equalizer
$29,160    2019 Equalized Assessed Value (EAV)
-10,000    2019 Homeowner Exemption
$19,160    2019 Adjusted Equalized Assessed Value
X.08    2019 Tax Rate (example; your tax rate could vary)
$1,532.80    Estimated Tax Bill in dollars     

A property tax exemption is like a discount applied to your EAV. If you qualify for an exemption, it allows you to lower your EAV. This would result in a lower property tax bill for you.

The rest of this article will address the exemptions available to Illinois property owners. This discussion applies to single-family homes, condominiums, and cooperatives. It does not apply to commercial or rental properties. It is based on Cook County procedures.

Check with your township or county tax assessor’s office for information about property tax exemptions. Some county tax assessor websites let you see your property tax history and the exemptions you are currently getting.

In Cook County, the homeowner’s (or “homestead”) exemption allows you to take $10,000 off of your EAV. The $10,000 reduction is the same for every home, no matter its market value or EAV. So if a property’s EAV is $50,000, its tax value would be $40,000. If a home has an EAV of $200,000, its tax value would be $190,000.

For counties bordering Cook, the maximum homeowner’s exemption is $8,000 for tax levy year 2023. All other counties have a maximum homeowner’s exemption of $6,000.

The homeowner’s exemption is available only for your primary residence. A primary residence can be a:

Single family home, 

Condominium, or 

Co-op.

Once you receive the homeowner’s exemption, you should automatically receive this exemption on your tax bill in future tax years. 

The senior citizen homestead exemption is available to property owners over age 65 for the applicable tax year. Property taxes are paid one year after they are assessed. That means for the bills that are payable in 2023, the homeowner needed to be age 65 by December 31st, 2022, or before. 

In Cook County, this exemption is worth an $8,000 reduction on your home’s EAV. This is in addition to the $10,000 Homestead Exemption. So, a senior citizen in Cook County can receive an $18,000 reduction on their EAV. In all other counties, the maximum exemption remains at $5,000 through the taxable year 2022. For taxable years 2023 and after, the maximum reduction is $8,000 in Cook and all contiguous or bordering counties. The maximum exemption will remain at $5,000 for all other counties.        

Again, this is applicable only to your primary residence. Filing requirements vary by county. Check with your local county assessor's office about filing for this exemption. Due to a new law, if you got a Senior Citizens Homestead Exemption in Cook County, you don't need to reapply for the years 2019-2023.

This benefit isn't an exemption, but it can still be very valuable to the homeowner. To qualify, you must be 65 on January 1st of the applicable tax year. Also, your total household income from all sources cannot exceed $65,000. (This income limit could change year-to-year.) If you qualify for the assessment freeze, your property’s assessed value can be frozen at the current value. This protects you against increases in assessed value for any year that you qualify for the freeze. 

For example, a person who is 75, is income qualified, and who has resided in her house after turning 65, will pay taxes based upon her assessed value from the year she turned 65.  This can be a significant savings in areas where values have increased.

People enrolled in the following programs are eligible for the "Senior Freeze." Proof of enrollment is required.

Aid to the Aged, Blind or Disabled (AABD) Program,

Supplemental Nutrition Assistance Program (SNAP),

Low Income Home Energy Assistance Program (LIHEAP),

The Benefit Access Program, or

Senior Citizens Real Estate Tax Deferral Program

Because this benefit is income-sensitive, you must apply for it annually.

The senior citizen tax deferral program is different from other property tax exemptions. It is a loan. It is not a discount or freeze on your taxes. This loan is for homeowners who are 65 by June 1 of the relevant tax year. Your household income from the previous year must be below $65,000. If you meet the requirements, you may qualify for a state loan of up to $7,500. This loan is to help pay your current property tax bills. 

The program requirements include:

The property must have been your primary residence for at least 3 years,

You must have property insurance,

Taxes cannot be delinquent,

If there is a mortgage on the property, the lender must approve the tax loan,

Multiple annual loans are permitted, 

You don’t have to pay back the loan while you live in the property unless you refinance your loans, and       

The loan balance, with 3% annual interest starting in 2023 (down from 6% due to a law change), must be paid when the property is sold, refinanced, or when the owner dies.          

When veterans come back from active duty in an armed conflict, they can get a $5,000 reduction in the EAV of their home. This reduction applies for two years in a row: the year you return from active duty and the next year. To get the exemption, you must own and live in your home on January 1 of each year. If you buy a home after January 1 of the year you return, you can get the returning veterans’ exemption the next tax year.

Every time you return from active duty, you can get this exemption again.

Veterans with disabilities exemption is for veterans with a service-connected disability as certified by the U.S. Department of Veterans Affairs. The exemption reduces certain amounts of the EAV on your primary residence. The amounts of the EAV deductions depend on your disability level. Starting in 2023, this exemption also applies to the surviving spouse of a veteran who died because of their service. A surviving spouse of a disabled veteran who hasn't remarried can also apply.

The automatic renewal for this exemption due to the Covid pandemic has ended. Most people will need to reapply annually. Those who have been certified as 100% disabled do not need to reapply annually.

A person with disabilities exemption provides an annual $2,000 reduction in the EAV of your property.
To qualify for this exemption, the person with the disability must: 

Live in the residence as your primary home, 

Be responsible for paying the property taxes, and

Be an owner of the home or have a legal interest in the home. 

Due to a law change, if you received the persons with disability exemption for tax year 2021, you will be automatically renewed going forward. New applicants will need to complete an application. 

The longtime homeowner exemption gives homeowners a bigger exemption with no limit on the amount. To qualify, your property's assessed value must have gone up a lot more than the limits set by the state. You also need to meet certain rules about owning and living in your home, and about your income.

The Cook County Assessor’s Office mails applications to homeowners who may qualify for this exemption. Learn more about the longtime homeowner exemption on the Cook County Assessor’s website.

You can apply online for any of these exemptions through the Cook County Assessor's Office. If you live outside Cook County, check your county's Assessor's Office website for more details.
                                                           
For more information about property tax exemptions available in Illinois, visit the Illinois Department of Revenue’s website.