American athletics earned 126 total medals, 40 of them gold, at the 2024 Paris Olympics. Closer to home, the State of Illinois won its own version of a gold medal. The Land of Lincoln can now claim, “We’re No. 1!”, however suspect the distinction might be.  According to a recent report compiled by ATTOM Data Solutions, Illinois had the highest effective property tax rate nationwide in 2023 at 1.88%.  New Jersey got the silver at 1.64% and Connecticut captured the bronze at 1.54%. States with the lowest rates were Hawaii (0.31%), Arizona (0.41%), and Alabama (0.42%).

What is an effective property tax rate and why should we care about the Prairie State’s top ranking? First, the property tax is administered and used entirely by local governments. Second, there is no set tax rate for the property tax in Illinois. Your annual tax bill is based on two factors – the equalized assessed value of your property and the amount of money local taxing districts need to operate in any given year. An effective tax rate estimates what percent, on average, of a property’s fair cash value is paid annually in taxes.  To calculate your property’s tax rate, divide your annual tax bill by what you estimate to be the value of your property. Thus, a home worth $250,000 with a tax bill of $7,500 means the individual’s effective property tax rate is 3%.

Property tax rates vary widely in Illinois depending on where you live. The same ATTOM study found that three of the top five highest effective tax rates in metropolitan areas across the country were not in Chicago or the suburbs, as we might expect, but actually in Rockford (#2 – 2.41%), Champaign (#3 – 1.95%), and Peoria (#5 – 1.91%). Interestingly, Springfield ranked sixth and Chicagoland came in eighth. Adding insult to injury, Illinois is home to five of the top 10 counties in the United States with the highest effective property tax rates: DeKalb (#3 – 2.51%), Kane (#7 – 2.15%), Lake (#8 – 2.15%), Kankakee (#9 – 2.15%), and Macon (#10 – 2.13%).

In addition to having the highest effective property tax rate in the country, Illinois takes top honors in another nationwide category – the number of local taxing districts. In 2022, the Illinois Department of Revenue reported 6,030 such districts statewide. These districts make up an A-Z list, with some having a unique set of responsibilities, such as mosquito abatement and street lighting. While townships, municipalities, and special districts each outnumber schools in Illinois, schools claim well over 50% of the property tax revenue generated each year.

What can we do to control rising property tax bills? Taxpayers could either wait for lawmakers to overhaul the state’s property tax system so local governments become less reliant on property tax revenue and more reliant on other sources, like federal and state transfers, or take the initiative. Taxpayers should familiarize themselves with the budget and levy process, attend public meetings where individual district spending plans are discussed and adopted, and express their views. Secondly, taxpayers can hold their local assessing officials accountable, some of whom hold elected positions, by reviewing their assessments annually, questioning increases, filing appeals, or consulting with a real estate tax attorney. In the end, vigilance is worth its weight in gold.

Sources:

ATTOM – “2023 U.S. Property Tax Report” (https://www.attomdata.com/hnr/2023-u-s-property-tax-report/#:~:text=).

ATTOM - “Top 10 U.S. Counties with Highest Effective Property Tax Rates in 2023” (https://attomdata.com/news/most-recent/top-10-u-s-counties-with-highest-effective-property-tax-rates-in-2023/).

Illinois Department of Revenue publication – “2022 Number of Taxing Districts in Illinois” (Excel spreadsheet).