Property Tax Breaks in Illinois

Property taxes in Illinois are assessed and collected on a local level by counties, municipalities, townships, schools and park districts. Real property, other than farmland, is assessed at 33 1/3 percent, except in Cook County, where the assessment ratio is 16 percent. Farmland is assessed based on its agricultural economic value, which is determined based on average prices for agricultural products, production costs, and interest rates charged by the Federal Land Bank over a five-year period. There is property tax relief in Illinois in the form of various homestead exemptions, a tax deferral program for seniors, and a property tax credit.

Homestead exemptions

Illinois homeowners can receive a general homestead exemption on their principal residence. The amount of the exemption is the increase in the equalized assessed value of the home above the value in 1977, up to a maximum exemption of $6,000. Cook County has an expanded homestead exemption that limits the increase in the property’s equalized assessed value to 7 percent each year up to a certain maximum amount.

Disabled homeowners in Illinois can claim a $2,000 exemption on their principal residence. Disabled veterans with a disability from 50% to 75% can receive a $2,500 reduction in the equalized assessed value of their home. Veterans with a disability of at least 75% can receive a $5,000 exemption. Disabled veterans who live in specially adapted housing can claim up to a $70,000 exemption. Eligibility for this exemption is determined by the Illinois Department of Veterans’ Affairs.

Veterans returning from active duty in an armed conflict can claim a one-time $5,000 reduction in the equalized assessed value of their principal residence. The exemption is for one year, but you can claim the exemption for another year in which you again return from active duty.

Illinois homeowners who are 65 or older can claim an exemption of $4,000 on their principal residence. Seniors who have total household income of less than $55,000 can claim an assessment freeze homestead exemption. This exemption freezes the equalized assessed value of your home at a base year amount and prevents any increase in value due to inflation.

If you make an improvement to your home, you can claim an exemption for the fair cash value that the improvement added to the home. This exemption continues for four years after the improvement is completed.

Tax deferral program for seniors

Homeowners 65 or older with household income less than $50,000 may qualify to defer all or part of the property taxes on their principal residence. The deferral is a loan that accrues interest at 6 percent a year. The loan is repaid when the property is sold or transferred. The maximum amount that can be deferred is 80 percent of the equity in the home.

How to apply for property tax relief

The different counties and local governments in Illinois may have different requirements, forms and procedures for applying for property tax relief. You should contact your county or local tax assessor for more information. You can find contact information on the Illinois Property Tax Appeal Board website.

Property tax credit

Illinois homeowners can claim a credit on their state income tax return for 5 percent of the property taxes paid on their primary residence. To claim the credit you need to file Schedule ICR – Illinois Credits with your state income tax return.

Sources:
Assessment and Appeal Information Directory – Illinois Property Tax Appeal Board
Exemption Descriptions – Cook County Assessor’s Office
Illinois Property Tax Credit – Illinois Department of Revenue
The Illinois Property Tax System – Illinois Department of Revenue
Property Tax Relief – Homestead Exemptions – Illinois Department of Revenue
Schedule ICR – Illinois Credits – Illinois Department of Revenue

Reference:

• The Facts on Illinois’ Tax Climate: www.taxfoundation.org/research/topic/26.html
• Living in Illinois: illinoisgis.ito.state.il.us/communities/
• An Overview of Property Tax: www.revenue.state.il.us/LocalGovernment/PropertyTax/PIO-16.PDF