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Study Compares Property Tax Burden in Northeast Illinois From 2009 to 2018

Posted on March 03, 2021

City of Chicago’s estimated residential rate remains lowest among selected municipalities in Cook County

(CHICAGO) --The Civic Federation released its annual estimate of effective property tax rates in the six-county region of northeastern Illinois today.

The full report is available here.

Among the 12 selected Cook County municipalities, Harvey had the highest effective tax rate for residential properties at 6.84% in tax year 2018 (down from 7.08% in 2017), while Chicago had the lowest residential rate at 1.76% (up from 1.74%). Harvey and Chicago have also had the highest and lowest estimated effective residential rates, respectively, during the prior nine years.

From 2009 to 2018, Harvey’s estimated effective residential tax rate increased by 29.6%. Chicago’s rose by 21.2%. Most notably, Chicago Heights’ estimated effective residential rate increased by 40.0%.

Over the same period, Chicago’s estimated effective commercial tax rate increased by 81.9%, but remains the lowest estimated rate in Cook County in 2018 at 4.42%. Harvey’s estimated effective commercial rate increased 85.0% and is also the highest in the County at 18.10%.

The full report also analyzes trends for selected municipalities in the collar counties of DuPage, Kane, Lake, Will and McHenry. Among these municipalities, Waukegan again had the highest 2018 effective property tax rate at 3.57% and Oak Brook again had the lowest rate at 1.07%. Most collar county municipalities analyzed experienced decreases in their estimated effective property tax rates between 2017 and 2018. However, a handful of municipalities saw one-year increases, including an 8.6% increase in Peotone.

“While these estimates are powerful for showing high-level trends over time, it is important to recognize that the Federation’s calculation of estimated effective rates is just that: an estimate,” said Laurence Msall, president of the Civic Federation. “Therefore, individual properties’ trends may be different from the estimate.”

Effective tax rates are a measure of property tax burden for homeowners and businesses. They translate the tax rates on property tax bills into rates that reflect the percentage of full market value owed in taxes by a property in a given year. Effective tax rates allow an apples-to-apples comparison of tax burden across municipalities and over time. This report covers the period between 2009 and 2018, the most recent year for which comparable data are available.

Changes in effective tax rates over time are a product of changing actual composite tax rates, changing median levels of assessment and changing equalization factors. To calculate effective tax rates, the median level of assessment is first multiplied by the equalization factor to approximate the percentage of a property’s total value that is taxed. (Both the median level of assessment and the equalization factor are calculated annually by the Illinois Department of Revenue.) This percentage is then multiplied by the actual tax rate to produce the effective tax rate.

To calculate the effective tax rate for an individual property, a property owner would divide the tax liability for a property into its estimated market value for the same year. Thus, a property with a tax liability of $6,000 and an estimated market value of $300,000 would have an effective property tax rate of 2%.

Click here to read the full report.