How is property taxed in Illinois?

Every three years, your local County Assessor estimates the “fair market value” of your property. This is similar to the amount 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, the assessed value is 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
     

What is a property tax exemption?

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 properties. Also, it is generally not applicable to residential rental properties. This article also is based on Cook County procedures.

Check with your township or county tax assessor’s office for information and resources about property tax exemptions. Some county tax assessor websites allow you to look up your property tax assessment history and see the exemptions you are currently receiving.

Homeowner exemptions

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. 

Senior citizen homestead exemptions

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. Because of a law change, if you have been granted a Senior Citizens Homestead Exemption in Cook County, you do not need to reapply for the years 2019-2023.

The senior assessment “freeze”

This benefit is not an exemption, but it has significant potential value 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 neighborhoods where values have appreciated.

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.

Senior citizen tax deferral

The senior citizen tax deferral program is different than the other property tax exemptions mentioned because it is a loan, not a discount or a freeze on your property taxes. This loan program is meant to help homeowners who are 65 by June 1 of the relevant tax year. Your household income from all sources (for the prior year) must be below $65,000. If so, you may qualify for a state loan of up to $7,500 to pay 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, including 3% annual interest for tax year 2023 and thereafter (reduced from 6% by a law change), is payable upon sale of the property, refinance or death of the property owner.          

Returning veteran exemption 

A returning veterans' exemption is for veterans returning from active duty in armed conflict. You are eligible to receive a $5,000 reduction in the EAV of your property only for each taxable year in which you return. This exemption does not auto-renew; it must be filed annually.

Veterans with disabilities

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. For taxable year 2023 and thereafter, this exemption also applies to a surviving spouse of a veteran whose death was service-related. Also, a non-remarried surviving spouse of a disabled veteran can 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.

Persons with disabilities exemption

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. 

Longtime homeowner exemption – Cook County only

The longtime homeowner exemption allows homeowners to receive an expanded homeowner exemption with no maximum amount. To qualify, there must have been a significant property assessment increase that exceeded the maximum amounts set by the state legislature. There are also eligibility criteria related to household ownership, occupancy, and 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.

Applying for an exemption

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