Calculate How Property Taxes Are Calculated in Illinois

Understanding Property Tax Calculations in Illinois

In Illinois, understanding the calculation of property taxes requires knowledge of several key components. Property taxes are assessed and collected on a biennial basis, with assessments conducted by local officials who determine the market value of each property.

Assessment and Equalization

The first step in the process is assessing the residential property at 33.33% of its market value, although this percentage may vary across different counties. For example, Cook County uses a lower assessment level for residential properties at 10%. Post-assessment, county boards review and may adjust these values to ensure accuracy and fairness, a practice known as equalization. Additionally, the state issues an equalization factor to maintain uniform property values across counties. The effective state equalization factor for 2019 was 2.916.

Tax Rate Application

After determining the Equalized Assessed Value (EAV) by applying the state equalization factor to the assessed value, the local tax rate is multiplied to compute the total real estate tax. Local tax rates vary significantly by location, with northeastern Illinois, notably Lake County, experiencing higher rates than other areas.

Exemptions and Reductions

Tax obligations may be reduced via exemptions like the general homestead exemption, which lowers the EAV of a home. Most homeowners in Illinois qualify for this exemption, offering relief from the state's high property tax burdens.

For detailed property tax calculations, homeowners should verify current assessment ratios and tax rates specific to their locality and consider applying for applicable tax reductions and exemptions.

How Property Taxes are Calculated in Illinois

Understanding the calculation of property taxes in Illinois is crucial for homeowners. Illinois determines property taxes based on the assessed value of the property. Each property's market value is appraised by local assessing officials, and then a specific percentage, known as the assessment level, is applied to derive the assessed value.

Assessment Levels

In Illinois, the assessment level differs by location. For residential properties in Cook County, the assessment level is set at 10%. In contrast, the rest of the state uses an assessment level of 33.33%. This fundamental disparity plays a significant role in the variation of tax amounts across the state.

Equalization Factor

The assessed value is further adjusted using a state equalization factor to ensure uniformity across different counties. This factor adjusts the assessed values to a level of uniformity statewide, which is essential for fair tax distribution.

Tax Rates and Calculations

After determining the assessed value and applying the equalization factor, the appropriate tax rate is applied. The average property tax rate in Illinois stands at 2.07%, with Cook County typically higher at approximately 2.19%. The formula used to calculate the actual property tax payable is straightforward: the final assessed value multiplied by the local property tax rate.

Example Calculation

For a house in Cook County valued at $300,000, the calculation would apply the 10% assessment level, adjust with the equalization factor, and then apply the tax rate. It's thereby essential for property owners to understand these components to anticipate their tax responsibilities accurately.

By understanding this framework, homeowners can better manage and even contest their assessed property values if discrepancies are suspected. Key exemptions like the General Homestead Exemption and the Senior Citizens Homestead Exemption can also provide significant tax relief, thus reducing the assessed value further.

Examples of Calculating Property Taxes in Illinois

Example 1: Residential Property in Cook County

To calculate property taxes for a residential property in Cook County, Illinois, first determine the fair market value of the home, for example, $250,000. Next, apply the county's assessed value percentage, typically 10%. So, the assessed value becomes $250,000 * 0.10 = $25,000. Then, multiply the assessed value by the local property tax rate, say, 2%. Hence, the property tax due is $25,000 * 0.02 = $500.

Example 2: Commercial Property in Lake County

For a commercial property valued at $500,000 in Lake County, the process starts by applying the assessment level of 25%, resulting in an assessed value of $500,000 * 0.25 = $125,000. If the local tax rate is 2.5%, then property tax amounts to $125,000 * 0.025 = $3,125.

Example 3: Industrial Property in Peoria

An industrial property in Peoria with a market value of $800,000 will be assessed at 25%. This makes the assessed value $800,000 * 0.25 = $200,000. With a local tax rate of 2.8%, the property tax is calculated as $200,000 * 0.028 = $5,600.

Example 4: Vacant Lot in Madison County

If a vacant lot in Madison County is valued at $50,000, apply the 12% assessment rate to find the assessed value, which is $50,000 * 0.12 = $6,000. Assuming the local tax rate is 1.9%, the property tax due is $6,000 * 0.019 = $114.

Example 5: Farm Property in Sangamon County

A farm in Sangamon County valued at $300,000 assessed at 33% results in an assessed value of $300,000 * 0.33 = $99,000. With a tax rate of 1.75%, the property tax calculation will be $99,000 * 0.0175 = $1,732.50.

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