Understanding state's property tax cycle

School districts and village setting 2024 levies, which will determine 2025 tax bill

Last updated Nov 13, 2024 4:50pm
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The property tax is largest single tax in Illinois and is the major source of revenue for Community Consolidated District 181 and Hinsdale High School District 86. The Village of Hinsdale also relies on property taxes as a significant source of funding, as does the Hinsdale Public Library, although the village has several other revenue streams to support operations.

Taxing bodies are required each year to file a levy, or a request for property tax revenue. Setting the levy actually is the fourth of six steps in the property tax cycle as outlined below.

Much of the information on this page is taken from The Illinois Property Tax System: A General Guide to the Local Property Tax Cycle, published by the Illinois Department of Revenue, and documents created by local taxing districts. The accompanying glossary provides definitions for several terms.

Steps of Illinois taxing cycle

1. Assessment

All property is appraised so values for property tax purposes can be determined. The chief county assessment officer (county assessor in Cook, township assessor in DuPage) ensures assessment levels are uniform and at the legal assessment level by applying a uniform percentage increase or decrease to all assessments in the jurisdiction, otherwise known as “equalizing” assessments.

By law, most property is assessed at 33 1/3 percent of market value. Cook County is the exception; it has 13 classes of property that are assessed at anywhere from 16 percent (residential) to 33 percent (commercial) of market value. Property is reassessed every four years in DuPage and every three years in Cook.

2. Review of assessment decisions

County boards of review determine whether local assessing officials have calculated assessed values correctly, equalize assessments within the county, assess any property that was omitted, decide if homestead exemptions should be granted and review nonhomestead exemption applications.

Property owners and local taxing districts may appeal what they believe to be unfair assessments to their local county boards of review and, if dissatisfied with that decision, the State Property Tax Appeal Board or circuit court.

3. State equalization

The Illinois Department of Revenue equalizes assessments among counties and issues a state equalization factor for each county to bring the level of assessment to 33 1/3 percent of market value.

4. Levy

Taxing districts determine the amount of revenue they need to raise from property taxes, hold hearings if the levy increase is 5 percent or more and certify levies to the county clerk. Each taxing district must show a separate amount for each fund for which it levies. All levies must be filed with the county clerk by the last Tuesday in December, which is Dec. 31 this year.

5. Extension

The county clerk applies the state equalization factor, calculates the tax rate needed to produce the amount of revenues each taxing district may levy legally, apportions the levy among the properties in a taxing district according to their EAV so tax bills can be computed, abates taxes as directed by taxing districts and prepares books for the county collector. The term “extension” also refers to the amount of taxes actually billed.

6. Collection and distribution

The county collector prepares tax bills, receives payments from property owners, distributes taxes to the local government taxing districts that levied them and administers sales of liens on real estate parcels due to nonpayment of taxes.


 

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Glossary

abatement: a local taxing district may instruct the county clerk to abate, or not collect, any portion of its taxes

assessed value: the value placed on a property by the county assessor for tax purposes

capped funds: generally speaking, a taxing district’s operating funds (see tax cap entry for more)

consumer price index: the CPI used for tax cap purposes is the national CPI for all urban consumers for all items as published by the U.S. Department of Labor Bureau of Labor Statistics. equalized assessed value (EAV): the assessed value multiplied by any state or county equalization factor. The result is the value from which the tax rate is calculated after deducting homestead exemptions, if applicable.

extension: the actual dollar amount billed to property owners, which equals the taxing body’s net equalized valuation multiplied by its tax rate as calculated by the county clerk

levy: a taxing body’s annual request for a specific amount of property tax revenue to support operations and debt payments

net equalized assessed value: the equalized assessed valuation of any property minus any legal exemptions, such as the Homestead Exemption

new growth: new construction or annexed property in a taxing district. The tax cap law provides an allowance for new growth in addition to the CPI increase.

p-tell percentage: the change in the CPI between December of the current and previous year. The percentage for 2023, which will be used in the 2024 levy, is 3.4. Its highest was 7 percent in 2021 and its lowest was .1 percent in 2009.

property tax: the single largest tax in Illinois. It is sometimes called an “ad valorem” tax, which means “according to value.”

tax base: the total net equalized assessed valuation of the taxing district

tax cap: officially known as the Property Tax Extension Limitation Law, it is designed to limit increases in the property tax extensions for operating funds to 5 percent or the change in the previous year’s consumer price index, whichever is lower, plus an amount for new growth. The cap does not apply to bond repayment.

tax rate: the county clerk calculates each taxing body’s rate by dividing its levy by its total net equalized assessed valuation. That rate is then multiplied by a home’s EAV to determine the tax bill for that property.

truth in taxation: a district must publish a legal notice and hold a public hearing if the levy is more than 105 percent of the previous year’s extension