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FAQ

General Information
What is Property Tax?
History of Illinois Property Tax
What is Considered Property?
How is the Value of Property Determined?
How are Farm Properties Valued in Illinois?
Who Must Pay Property Taxes?
Who Spends Property Taxes?
How Important is the Property Tax Compared to Other Taxes?

Property Assessments
What is an Assessment?
Who assesses property?
Who Oversees that the Assessment Work is Completed Each Year?
When is Property Assessed?
When are Initial Assessments Complete?
Area Taxpayers Notified about the Assessments on their Property?
What Property is Exempt From Property Tax?
What Homestead Exemptions are Available?
What Other Types of Relief are Available?
Can You Tell Me About the Conservation Stewardship Program?
What Problems are Generated by Inequality in Assessments for Taxpayers?

Equalization
What is Equalization?
Who Has Authority to Equalize?
How Much Variation in Assessments Exists Among the Counties?
How Does the Equalization Factor Affect the Assessment on a Taxpayer's Property?

Assessment Review
What Can Taxpayers Do If They Believe Their Assessments Are Unfair?
Who Sits on Boards of Review?
What Powers and Duties do Board of Review Have?
Seven Steps to Appeal an Assessment
Reason For An Appeal
Evidence Needed
Informal Appeal
State Property Tax Appeal Board

Tax Billing and Collection
How Does the Equalization Fact Affect Tax Rates?
What is a Levy?
How do Levies Affect Tax Rates?
What Makes Tax Bills Increase?
When are Taxes Extended (Billed)?
How is the Tax Rate Computed?

General Information 

What is Property Tax?


Property tax is a tax based on the fair cash value of the property owned. For this reason it is often called an ad valorem tax, meaning that we tax "according to value" of real estate.

History of Illinois Property Tax

When Illinois became a state in 1818, the Constitution contained a provision for taxing property in direct proportion to the value of property. From 1818 to 1930, amendments to the constitution provided the State with various powers and authorities concerning property tax. The Revenue Act of 1872 gave Illinois final authority for setting valuations. The last year the state levied real estate taxes was 1930.

Since then, property taxes have been levied at the local level. The Department of Revenue issues guidelines (e.g., determining equalization factors, approving exemptions, distributing assessment manuals, etc.) and provides technical assistance to local assessing officials.

Property tax is a local tax assessed by the county. Revenues from property tax are collected and spent at the local level.

What is Considered Property?

Property can be divided into two classes - real and personal.

Real property is land and anything permanently attached to the land. Examples are buildings and fixtures permanently or constructively attached to a building. Personal property is all property which is not real property.

Personal property includes automobiles, livestock, money, and furniture.

How is the Value of Property Determined?

“Value” is a complicated concept with many definitions.

The measurement of market value for tax purposes is the job of assessors, who use one or more of the three basic approaches to measure it:

market data - comparing recent selling prices of similar properties;

cost - coming up with a value of the cost of reproducing the property minus accrued depreciation plus land value;

and income - calculating the present worth of the income from an income-producing property.
 

Most real property in Illinois must be assessed based on its value on the open market; this value is the most probable sale price of a property in terms of money in a competitive and open market, assuming that the buyer and seller are acting prudently and knowledgeably, allowing sufficient time for the sale and assuming that the transaction is not effected by undue pressures.

How are Farm Properties Valued in Illinois?

Farms in Illinois are not assessed according to traditional market value, but according to “agricultural economic value”, which is defined by law. This value is based on statewide studies of soil capability and of the net income generated from farmland in Illinois. Each soil type in the state is rated by the University of Illinois - College of Agriculture according to its capability of producing crops. This rating is known as the “soil productivity index”. A State Farmland Technical Advisory Board certifies to the Department of Revenue a five-year average net income for each of these soil ratings. The agricultural economic value for each index is then calculated by dividing the net income by the average of the Federal Land Bank mortgage rate for the same five years. These values are certified to each county by the Department of Revenue by May 1st of the year before they are to be used in assessing. In each county, a Farmland Assessment Review Committee, consisting of local officials and farmers, advises the Chief County Assessing Officer regarding the interpretation and application of the values certified. This committee may propose alternate recommendations to the Department if it disagrees with the values certified. The State Property Tax Appeal Board makes the final decision if there is any disagreement as to the appropriate values and procedures to be used in a county.

To assess an individual farm, an assessor finds the soil productivity index rating for the farm’s crop land and assesses this acreage at one-third of the agricultural economic value certified for these ratings. Permanent pasture is assessed at one-third of the value that would be assigned to it if it were cropland, and “other farmland” (e.g. forest land, grass waterways) at one-sixth of cropland. Wasteland has no assessed value unless it contributes to the productivity of the farm.

Farm buildings are assessed at one-third of the value they contribute to the productivity of the farm. Farm home site and dwelling assessments are based on market value.

Who Must Pay Property Taxes?

All owners of real property must pay property tax unless specifically exempted by State law.

Leaseholders must pay property tax if they are leasing real estate from an owner whose property is exempt from property tax.

Owners of business, industrial, agricultural and residential property all pay property tax.

Renters also contribute to the property tax, but do so indirectly through their rent. Landlords consider taxes as cost of doing business and adjust their own rents to cover them.

In Illinois, taxpayers now pay property taxes only on their real property. Personal property tax for individuals was eliminated in 1969.


Who Spends Property Taxes?

In Lake County we have over 200 individual entities of local government that levy property taxes. 

Property taxes are raised, spent, and distributed locally.

They finance a major part of the services provided by local government units which benefit Lake County citizens and their property.

The largest share of taxes goes to school districts, generally 65% of each tax bill.

How Important is the Property Tax Compared to Other Taxes?

The property tax is the major source of tax revenue for local governments in Illinois, as it produces more than three-fourths of their total tax revenue. Some types of governmental units, such as cities, are less dependent on the property tax than are other units, such as school districts, which have no other taxing powers.

The Property Tax Cycle - from the assessment of property to the collection and distribution of taxes - takes nearly two years for most property. It can be divided into six steps:

 
(1)   assessment
(2)   review of assessments
(3)   equalization
(4)   levy

(5)   extension
(6)   collection and distribution of property tax revenue.


Property Assessments

What is an Assessment?

An assessment involves identifying the real property within a jurisdiction, listing it, appraising it and placing a value for it on the tax rolls. This value is known as the assessment and is the basis for determining what portion of the total tax burden each property owner will bear.

In Illinois, the statutory assessment level is normally one-third of the market value of a property with several exceptions including:

(1) Farmland
(2) approved forestry management plan
(3) common areas
(4) certain subdivision land
(5) approved dedicated nature preserve, conservation stewardship, right of public benefit
(6) alternate valuation for solar heating or cooling

Who Assesses Property?

Most property is locally assessed, meaning valued by an assessment professional in our county.
In Lake County township assessors have primary valuation responsibility.
 
In Lake County, seventeen of our eighteen assessors are full-time.
 
Assessors must qualify to hold office on the basis of certain course work in assessment techniques.

A few types of property are assessed by the State, such as railroad operating property and pollution control facilities which have been certified as such by the Illinois Environmental Protection Agency.

The value of state-assessed property is a small percentage of the value of all taxable property. State-assessed properties are valued by the Department of Revenue and assessments are certified to appropriate County Clerks for inclusion in local tax bases. 

Who Oversees that the Assessment Work is Completed Each Year?

The completion of the assessment process by assessors is subject to supervision and, if necessary, revision by the Chief County Assessment Office. The Chief County Assessment Officers are usually appointed by County Boards and must have of relevant experiences, pass a qualifying examination given by the Department of Revenue and possess a professional appraisal designation.

When Is Property Assessed?
In Illinois property is to be viewed, inspected and revalued at least once every four years.
Between these General Assessment years, assessors may revalue any property whose value has changed or is incorrect.
Farm acreage must be reassessed annually.
 
Lake County went to a single general assessment year for the entire county in 2011; and the general assessment year will occur every four years thereafter.

January 1st begins the assessment cycle for all real property which is valued as of that date.

The Chief County Assessment Officer should call on the County Clerk to receive the assessment books listing all parcels of real estate to be assessed in each of the townships in the county.

The establishment of farmland assessment values and procedures begins May 1st of the year before the tax year begins (in 2011 for 2012 assessments).

When Are Initial Assessments Complete?

In Lake County, township assessors complete their assessments in late summer through the fall.

After they have certified their assessment books as being correct, they turn them in to the Chief County Assessment Office, which equalizes assessments to 33.33% of market value through the use of an equalization factor.

Assessment books are then given to the County Board of Review for further review in
the assessment appeal process.

Are Taxpayers Notified About the Assessments On Their Property?

In General Assessment years, lists of all property assessments must be printed in a public newspaper published in the county and all taxpayers are sent an assessment notice.

In the years between the General Assessment years, a list of real estate assessments which have been changed is published.

Taxpayers in counties other than Cook must also be mailed notices (“blue cards”) if their real property assessments have been changed from the preceding year’s assessments unless the change was caused only by the application of an equalization factor by the Chief County Assessment Office. 

As a courtesy, Lake County taxpayers are sent notice of their assessments every year, regardless of whether a change has occurred.  The notices may go to mortgage holders if arrangements have been made for tax bills to go directly to them, but the law requires mortgage holders to mail copies of notices to taxpayers.

Taxpayers have the right at any time to inspect property record cards and other assessment records for any property, subject to reasonable rules and regulations established by local officials.

What Property is Exempt From Property Tax?


The Illinois Constitution allows an exemption from real estate taxes for property of the State, units of local government and school districts, property used exclusively for agricultural and horticultural societies, and for school, religious, cemetery, and charitable purposes, as long as the property is not leased or otherwise used with a view to profit. Exemption of most property of the Federal government is required by Federal law.

Property owners must apply for these exemptions to their County Board of Review.

After hearings are held on these matters, recommendations are made by the Board of Review and forwarded to the Department of Revenue, with each full record, for final disposition.

Once property is approved for exemption, the owner, agent or attorney must annually file a Certificate of Status of Exempt Property with the Board of Review to retain that exemption.

What Property Tax Relief is Available?

General Homestead Exemption
Home Improvement Exemption
Senior Homestead Exemption
Senior Citizen's Assessment Freeze
Returning Veteran's Exemption
Disabled Veteran's Exemption
Disabled Veteran's Standard Exemption
Senior Deferral
Benefit Access Program (formerly Circuit Breaker)

What Other Types of Relief are Available?

An open space assessment based upon a property’s value for open space purposes, rather than upon its market value, is available in every county but Cook. Land can be considered in open space use if it consists of ten acres or more and is used exclusively for maintaining or enhancing natural or scenic resources, or for promoting conservation of natural resources.

Open space property must have been in the qualifying use for the preceding three years. Land used primarily for residential purposes does not qualify for this preferential assessment. Application for Open Space treatment must be made to the Chief County Assessment Office annually.

Owners of property that is heated or cooled by solar energy equipment may apply to have a property valued as though it used conventional heating or cooling equipment, even though the special equipment has added value to the property. Pollution control equipment in commercial properties also receives a preferential assessment.

Single-family residential property with certain historic designations may be eligible for preferential assessment if its owner has received from the Historic Preservation Agency a certificate of rehabilitation for the property. Unless a taxing district has previously opted out of this program, assessments are frozen for a period of eight years and are gradually increased to full assessments over the next four years.

Land in transition from vacant land to residential, commercial, or industrial use may qualify for a preferential assessment, commonly termed the “sub dividers rate”. The assessed value of such land platted and subdivided will not increase due to the addition of streets, sidewalks, curbs, gutters, sewer, water, and utility lines. The preferential assessment of a lot ends when it is sold, a building is constructed on it, or when it is otherwise used for a
business or residential purpose.

Can You Tell Me About the Conservation Stewardship Program?

Landowners who wish to receive the special valuation for unimproved land provided by this law are required to prepare a Conservation Management Plan according to rules developed by the Department of Natural Resources (DNR). That Plan will describe how the land will be managed to protect and maintain environmental resources. When a Conservation Management Plan is approved, DNR will notify the Department of Revenue. Revenue will then notify the appropriate county assessor of the properties that have qualified for the special valuation and the necessary adjustment in the valuation will be made.

The basic provisions of the Conservation Stewardship Law are
:

Taxpayers who wish to receive the special valuation offered by the program must first submit a conservation management plan to DNR.

 Land accepted into the Conservation Stewardship Program will be valued at 5% of market value for property tax purposes.

 If a landowner fails to comply with their approved conservation management plan, the land will be removed from the program and the landowner will be required to pay the difference between the actual taxes paid and what the taxes would have been without the reduced valuation.

Sale or transfer of land enrolled in the Conservation Stewardship Program does not affect the valuation of the land unless the acreage requirement is no longer met or the use of the land changes.
 
Submission of a conservation management plan to DNR will be treated as compliance with the requirements of that plan until DNR can review the plan.

The Conservation Stewardship Program will be administered according to rules developed by DNR.

Land eligible for enrollment includes:

Five or more contiguous acres of unimproved land - unimproved land means woodlands, prairie, wetlands or other vacant and undeveloped land that is not used for any residential or commercial purpose that materially disturbs the land.

Land in a forestry management plan under Section 10-150 of the Property Tax Code.

Land registered or encumbered by conservation rights under Section 10-166 of the Property Tax Code.

Land NOT eligible for enrollment includes:

Any land in Cook County

Land assessed as farmland under Sections 10-110 through 10-145 of the Property Tax Code

Land valued under Section 10-152 (vegetative filter strips) or 10-153 (non clear-cut along navigable waters) of the Property Tax Code

Land valued as open space under Section 10-155 of the Property Tax Code Land certified under Section 10-167 of the Property Tax Code

Any property dedicated as a nature preserve or nature preserve buffer under the Natural Areas Preservation Act.

What Problems are Generated by Inequality in Assessments for Taxpayers?

Variation in assessment levels can create problems for taxpayers. Most obvious is the unfair distribution of the tax burden among taxpayers within the same taxing jurisdiction.

If, for example, two adjacent houses with identical market values of $60,000 were assessed at different levels of their full value, say ten percent and thirty percent, one house would have an assessed value of $6,000 and the other of $18.000. Under a tax rate of 8 percent ($8 per $100 of assessed valuation) the first homeowner would have a tax bill of $480, while the second would pay $1440, even though their houses have the same market value. Assessors should prevent this type of inequality by assessing at a uniform level within a jurisdiction.

However, even if uniformity exists within a given jurisdiction, inequities can arise because of differences in assessment levels among different assessing jurisdictions. If, for example, one township in a county was assessed at an average level of 20 percent of full value and another 40 percent and both townships were in the same school district, property owners in the township assessed at the higher level would, on average, be paying twice as much in school taxes as property owners in the other township.

Uniformity in average assessment levels among assessing jurisdictions (i.e., among township, or multi-townships) prevents this type of inequality. In addition, uniformity among county average assessment levels is important because distribution formulas for State grants-in-aid for education, highways, and public assistance include the assessed valuation as a component. Uniform assessment levels also ensure an equal basis for applying tax rates and bonded indebtedness limitations to units of local government.

Equalization

What is Equalization?

Equalization is the application of a uniform percentage increase or decrease to assessed values of various areas or classes of property in order to bring assessment levels, on average, to the same percentage of market value.

Equalization of assessed values is important (and performed) at each level of government - township, county and state.

Who Has Authority to Equalize?

Chief County Assessment Officers, County Boards of Review and the State possess certain powers to equalize assessments. Chief County Assessment Officers determine the level of assessments for non-farm property by conducting annual assessment/sales ratio studies. These studies may be done for geographic areas within a county (generally township or multi-township assessment jurisdictions) or by class of property. Then the Chief County Assessment Officers and/or Boards of Review may use equalization to raise or lower the assessments in an effort to achieve greater uniformity and equity within the county. The Chief County Assessment Officer in Lake County this intra-county equalization authority.

Equalization between counties (inter-county equalization) is the State’s responsibility and is carried out by the Department of Revenue’s Office of Local Government Services. Local equalization is done prior to mailing assessment notices in Lake County. State equalization is done in April prior to tax billing.

It must be remembered that although inter-county equalization is necessary to eliminate certain inequities among taxpayers residing within the boundaries of taxing units over-lapping two or more counties, it is not a substitute for proper intra-county equalization by local officials.

The State does not have the authority to adjust individual assessments. It can only certify to County Clerks in each county the percentages that must be applied to raise or lower the aggregate or total of all non-farm assessments in counties, except assessments of coal rights, to bring average assessment levels in the counties into line with the statutory standard. These percentage certifications are equalization factors.

The equalization factor (sometimes called a multiplier) is the tool used by the State to adjust average assessment levels in various counties to the same percentage of full value. Current law declares the proper percentage to be 33 1/3 percent of the market value. Suppose, for example, that one county was assessing property at an average level of 10 percent of the market value. It would be necessary to assign a factor of 3.333 to the county to bring its average assessment level up 33 1/3 percent of the market value. That 3.333 would be that county’s equalization factor. After assessors conduct their valuation duties each year, the result is that Lake County local equalization factors are generally less than four percent.

The equalization factor is computed annually from sales data received from buyers and sellers of property in each county. These sale prices are compared to assessed value information from county records. Such a survey is called an assessment/sales ratio study. For example, if a property’s assessed value is $10,000 and it sells for $30,000, the ratio of its assessment to its sale price would be 10,000/30,000 or 33 1/3 percent. This 33 1/3 percent is called its assessment/sales ratio. Each year the Department conducts such a study for each county and determines from the results the average percentage of market value at which each county’s non-farm property is assessed.

After receiving tentative abstracts of assessments, the Department computes tentative (preliminary) equalization factors for each county which will raise or lower the average assessment level to 33 1/3 percent of market value.

The Department holds public hearings in Springfield after it issues tentative factors. At these hearings, public officials and other interested persons may present evidence regarding assessment levels. The Department analyzes any new evidence before calculating final factors.

The Department must also wait to compute any final factors until Boards of Review have completed their work and adjourned. Most counties, therefore, receive their equalization factors either late in the assessment year or early the following year.

How Much Variation in Assessments Exists Among the Counties?

In Lake County, the level of assessment is generally very close to 33.33%. Counties that do not achieve the statutory level will receive a State-issued factor other than 1.0000 to bring assessments, on average, to 33 1/3 percent of market value. In recent years, Lake County has had a factor other than one due to the high volume of appeals, coupled with valuation change requests submitted by local assessing officials.

How Does the Equalization Factor Affect the Assessment on a Taxpayer's Property?

After receiving final equalization factors from the Department of Revenue, County clerks must multiply the locally-assessed value of each non-farm parcel in their counties, other than coal rights, by those factors. Unless a factor is 1.0000, this multiplication will either increase or decrease the locally-assessed value of each parcel. The result is the equalized assessed value for a parcel for tax billing purposes. Farms and coal rights are not affected by the factor, as their assessed valuation is defined by law as an equalized assessed value.

Assessment Review

What Can Taxpayer's Do if They Believe Their Assessments Are Unfair?

Taxpayers should first discuss the assessed value with their township assessor's office.

Taxpayers who believe that their assessments are unjust may appeal their assessed value.

Taxpayers in Lake County begin the appeal process with the County Board of Review.
 
If dissatisfied with the Board’s decision, they can choose between two of the options below:
 
(1) They may take their appeal to the State Property Tax Appeal Board, a five-member board appointed by the Governor. The State Property Tax Appeal Board’s decisions are subject to administrative review in Circuit Court, should the taxpayer so desire to take it to that level. Taxpayers that take their cases to the State Property Tax Appeal Board can argue solely on their property’s value and the correctness of assessments.


(2)The other alternative for taxpayers is to appeal the decision of the County Board of Review directly to the Circuit Court.  When taxpayers go to court to challenge the assessment, however, they must prove either fraud on the assessor’s part, or that their assessment is so high that it is “constructively” fraudulent.

Who Sits on Boards of Review?

Illinois law mandates composition of the Boards of Review. In most township counties, three persons appointed by the County Board comprise the Board of Review. In counties such as Lake County, candidates for the Board of Review must pass an examination administered by the Department of Revenue.  The Board of Review in Lake County also uses hearing officers to assist with conducting the assessment review process.

The Office of the Board of Review in Lake County is housed in the Chief County Assessment Office located in the county courthouse. The Chief County Assessment Officer (CCAO) is the Clerk of the Board of Review.  The CCAO staff served as the support mechanism for all Board of Review activities and the staff of the office is also able to answer taxpayer’s questions on assessments.   

By law, Boards of Review must convene by the first Monday in June. The Lake County Board of Review completes hearing appeals in early February. After the Board of Review adjourns, assessment books are returned to the County Clerk for computation of tax rates and tax bills.

What Powers and Duties Do Boards of Review Have?

As discussed above, the Board of Review has the power to raise and lower individual assessments on appeal. They may also adjust assessments on their own initiative. No assessment can be raised however, until the affected taxpayer has been notified and give the opportunity for a hearing.

Boards also have the power to assess property that has been omitted from assessment rolls. They have the duty to ensure that assessments are equitable within counties by applying a blanket increase or decrease on areas within the county, on classes of property, or on townships requiring an adjustment based on assessment / sales ratio studies.

They also review petitions for exemption from property taxes and make recommendations to the Illinois Department of Revenue, which rules on exemptions.

Six Steps to Appeal an Assessment

Obtain the assessed valuation of your property, along with the values of other similar properties in the same market area.

  1. Determine the fair market value for your property.
  2. Discuss the assessment with your township assessor's office.
  3. Determine the basis for your formal appeal.
  4. File a written appeal with your Board of Review.
  5. Present evidence of unfair assessment to the Board of Review at the hearing.
  6. Appeal the Board of Review's decision tot he State Property Tax Appeal Board (in writing), in the even of an unsatisfactory decision by the Board of Review, or appeal directly to the Circuit Court.

For information regarding the steps in appealing a farm land or farm building assessment, contact your local assessing officials.

Reasons For An Appeal

You have a reasonable appeal if you can support any of the following claims:

  1. The assessor's market value estimate is higher than the actual market value. (This claim can be easily supported if you have recently purchased your property).
  2. The primary assessment of the property is based on inaccurate information such as an incorrect measurement of a lot or building.*
  3. The assessment is higher than those of similar neighboring properties.
  4. The assessed value is at a higher percentage of market value for your property than the prevailing township, or county median level, as shown in an assessment / sales ratio study.

*In this event, a Certificate of Error may be issued by the Township Assessor's Office with the concurrence of the Board of Review, even after the tax bill is received. 

Evidence Needed

To support your claim of an unfair assessment you will need substantial evidence, some of which may be obtained from your Township Assessor, the Chief County Assessment Office, from a professional appraiser hired at your own expense or through your own research. Pertinent evidence for non-farm property should include some or all of the following:

  1. A copy of the Real Estate Transfer Declaration, a deed or a contract for purchase.
  2. An appraisal of your property.
  3. A Comparison Grid of recent sales of comparable properties.
  4. A photograph of elements detracting from the value of your property not shown on the property record card and an estimate, in terms of dollars, of their negative effect on the market value.
  5. If your appeal is on uniformity of assessments; a comparable grid should be submitted

Informal Appeal

An assessor who still has assessment books for a given year can correct any assessment. Calling an erroneous assessment to the assessor's attention early in the year may result in a correction without using the formal appeal process. Contact your Township Assessor to inquire about the accuracy of your assessment.

State Property Tax Appeal Board

Any taxpayer who is dissatisfied with the decision of the local Board of Review may appeal such decision to the State Property Tax Appeal Board.

To begin an appeal, a taxpayer must first file a petition for appeal with the Board. Official forms and Rules of the State Property Tax Appeal Board are available both in the Board's offices in Springfield, at the Board of Review office and on-line at http://www.state.il.us/agency/ptab.

Appeals to the State Board must be filed within thirty days of the postmark date or personal service date of a local Board of Review's decision.

Generally, failure to file within the thirty day period forecloses appeal of the assessment for the year in question.

The State Property Tax Appeal Board generally makes assessment decisions on one of two factual bases. The first is that the actual market value of a taxpayer's property is not accurately reflected in the assessment. The other avenue of appeal is an argument based upon equity.

If a taxpayer has received a reduction in assessed value from the State Board and the County Board of Review has already adjourned for the subsequent year, the taxpayer may appeal the subsequent year's assessment directly to the State Board within thirty days of the State's Board's decision.

Final decision of fact or law rendered by the State Board may be received by the Circuit Court under the Administrative Review Law on the record established in the State Board hearing.

Tax Billing and Collection

How Does the Equalization Factor Effect Tax Rates?

Count Clerks calculate tax rates for each taxing district by dividing the district's tax levy by it's tax base. A tax base is composed of the equalized assessed value of locally assessed property, less any homestead exemptions, plus the value of any State-assessed property. A levy is the amount of revenue a taxing district wants to raise through property taxes. The greater the tax base, the lower the tax rate needed to raise a given levy. An increase base, which may result from an increased equalization factor, generally results in a lower tax rate. A decreased base, which may result from the deduction of exemptions, results in an increased tax rate.

What is a Levy?

  • The governing board of each taxing unit determines how much money is needed to operate during the coming year and how much must be raised from the property taxes.
  • Certified to the County Clerk no later than the last Tuesday in December.
  • Tax levies are made for the various activities of government.
  • Money is allocated separately for each levy by spending account or "fund".
  • The fund structure is the framework within which the financial decisions of local governmental units are made.
  • Government bodies are entitled by State statute to use a number of funds. These could include a corporate (or general) fund, a bonds interest fund, and other specialized funds, such as a fire protection fund, a library fund, or a street and bridge fund.

How do Levies Affect Tax Rates?

Levies are made in dollar amounts. In order to raise the money requested in levies, County Clerks must calculate numbers which, when multiplied by the total equalized value (the tax base), will yield the amount of the levy. This number is the tax rate. Property tax rates are subject to limits set by the State Legislature. The applicable limit depends on the type of governmental unit and the type of fund. If the rate necessary to raise the amount of the levy is greater than the maximum legal rate, the maximum legal rate is applied and the amount of money raised is less than the levy. I some cases the tax rate limits may be modified by referendum.

What Makes Tax Bills Increase?

The amount of a property tax bill is determined by two things:

1. a property's equalized assessed value (a taxpayer's share of the total tax base)

2. the applicable tax rates, which depend on the level of spending of local taxing units in which the property is located.

If assessed values increase because of inflationary increases in property values, tax bills will not necessarily increase. As long as taxing districts do not increase their spending, a general increase in assessed values (i.e. the tax base) will mean lower tax rates and tax bills will stay the same. If taxing districts increase their spending, however, tax bills generally will increase regardless of changes in assessments.

The "Truth-In-Taxation Law" requires taxing districts to publish notices to taxpayers if the districts' proposed levies are at least 5 percent greater than the amount billed to property taxpayers the year before (excluding bonds and interest and election costs). This amount billed is called the extension. Districts must hold public hearings regarding proposed tax increases. County Clerks may not extend more than 5 percent over the previous year's extension if a taxing district does not certify that it has complied with these publication and hearing requirements.

When taxpayers feel their property assessments are unfair when compared to assessments on similar properties, they should use the appeal procedures outlined previously. On the other hand, if their appeal is that tax bills are going up, they should attend "Truth-in-Taxation" hearings to become familiar with he needs of local taxing districts which are spending their money, and to express their concerns about increasing taxes.

When Are Taxes Extended (billed)?

A County Clerk can begin the process of extending taxes only after the Board of Review has completed its work. State assessments and the final equalization factor have been certified tot he county, and all taxing units have levied. Since many Boards of Review do not adjourn until December or later, extension of taxes does not begin until the year following the assessment year.

How is the Tax Rate Computed?

The County Clerk calculates a tax rate for each fund used by each taxing district by dividing the tax levy for that fund by the district's total equalized assessed value that remains after deduction of homestead exemptions.

If the resulting rate exceeds the maximum allowable rate, the extension is limited to the amount which the maximum legal rate will produce when applied to the tax base.

The total district extension is further limited to 5 percent over the previous year's extension (excluding bonds, interest and election costs), unless the "Truth-in-Taxation Law" publication has been made and a hearing held.