How the Illinois Property Tax System Works
Illinois nevertheless continues to
rely heavily on property taxes to
fund local government, particu-
larly for kindergarten through
12th grade public education.
Historically, more than half of
public-school funding in the
state has come from property
tax-derived revenue, according
to the Illinois State Board of
Education
2,3
(Figure 1).
In Illinois, 39% of all local gov-
ernment revenue comes from
property taxes, according to
the Lincoln Institute for Land
Policy
4
. That compares with
an average of 30% across the
nation.
Although many other states rely
more heavily, in percentage of
revenue, on property taxes to
fund local government, Illinois
still has the nation’s second-
highest effective residential
property tax rates
5
— dened as
the percentage of a property’s
2 (Illinois State Board of Education, 2021
Annual Report) https://www.isbe.net/
Documents/2021-Annual-Report.pdf
3 In the 2020-2021 school year, when
school coffers, the percentage of public
education derived from property taxes
dropped to 43.5%, but that number will rise
again in coming years once all pandemic
funds are spent.
4 (Lincoln Institute of Land Policy,
“State-by-State Property Tax at a
Glance,” 2023) https://www.lin-
colninst.edu/research-data/data-
state-state-property-tax-glance
5 (ibid) https://www.lincolninst.
edu/research-data/data-toolkits/
state-state-property-tax-glance
value that is paid in taxes each
year, according to multiple
studies. Only New Jersey has
a higher effective property tax
rate. (See Figure 2)
Looked at another way, the
median residential property tax
bill in Illinois between 2015 and
2019 was $4,529, compared to
an average of $2,551 across the
nation, according to the Lincoln
Institute. That median Illinois
tax bill is the sixth highest in the
country.
There are many reasons that
property taxes are higher in
Illinois than other states that
rely more heavily, in percent-
age terms, on that tax for local
revenue. Among them: the
heavy reliance on the tax for
school funding, outsized costs
associated with restoring nan-
cial health to the state’s under-
funded government worker and
teacher pension systems, and
the high number of local govern-
ments in the state.
Illinois state govern ment pays
about 24% of all kindergarten
through 12th grade public
education costs, after pay-
ments for teacher pensions are
factored out, according to the
Illinois State Board of Education.
That’s the lowest funding level
among all 50 states, according
to the Center for Budget and Tax
Accountability.
6
6 (Illinois Report Card, 2022-2023 ), 2022)
https://www.illinoisreportcard.com/State.
aspx?source=environment&source2=reven
uepercentages
Federal Taxes
24.7%
State Taxes
31.9%
Local Property Taxes
43.5%
0%
10%
20%
30%
40%
50%
60%
70%
2000-
2001
2002-
2003
2004-
2005
2006-
2007
2008-
2009
2010-
2011
2012-
2013
2014-
2015
2016-
2017
2018-
2019
2020-
2021
% of Total Education Funding
2000-2021
See Footnote 3
Figure 1. Share of education funding by jurisdiction (Source: Illinois State Board of Education