BUDGET + TAX
MARCH 4, 2021
Illinois again ranked second for the highest property tax rates in the nation in 2021, behind only New Jersey.
Illinois homeowners average $4,942 in property taxes on the U.S. median valued home of $217,500 – exactly double the national average. That’s a tax each year of 2.27% of the house value, according to the 2021 state rankings by WalletHub.
“The first property tax bill I opened was sticker shock,” said retiree Jerry R. McDonald, who moved to Springfield in 2012 when he married his wife, Nancy, a lifelong Illinois resident. “The difference was about two and a half times what I had been paying in central Kentucky. It was very disconcerting.”
This is the fourth year Illinois has ranked second-highest in the WalletHub survey. The new survey found Illinois property taxes $237 higher than in the 2020 survey.
Illinois is surrounded by states with lower property taxes, a driving factor behind Illinois’ continued population loss. The state just saw its worst year of population loss since World War II. A move to Indiana would save an Illinoisan $3,089 in property taxes on that $217,500 house, based on WalletHub’s data. The savings would be $915 in Wisconsin, $2,831 in Missouri, $1,535 in Iowa, $3,076 in Kentucky and $1,599 in Michigan.
McDonald said since 2012 he’s seen his taxes rise too quickly in the Springfield area.
“Our property taxes have increased, at a rough guess, by about 15%. The state’s finances are a mess … The backlog of the pension fund is draining the state and the solution … is long term and complicated.”
While the median home value nationally is $217,500, the median home value in Illinois is lower: $194,500. Despite this lower median home value, Illinois is also home to higher average property taxes: $4,419. When each state was ranked by taxes on their own median value house, Illinois came in at sixth highest.
While homeowners are feeling the squeeze, the increases also affects the 36% of households that rent in the U.S., said Stephanie Leiser, lecturer in public policy at the University of Michigan’s Ford School. If you rent, she said your monthly payment likely absorbs a portion of the landlord’s property taxes.
High property taxes are an issue statewide, but Cook County property owners have especially felt the issue lately. The first installment of property taxes were due March 2 and came on the heels of an October report showing Cook County property taxes grew at roughly three times the rate of inflation from 2000 to 2020.
Pension debt is driving those high tax rates. Of the nearly $94 million current property tax increase for the city of Chicago, $42.5 million of that revenue will be used to make up shortfalls in pension funding. The city’s eight pension funds have accumulated nearly $45 billion in debt, more debt than 44 U.S. states. Local governments across Illinois have pension debt worth $63 billion that causes property taxes to rise each year.
Chicago Mayor Lori Lightfoot has called for change and highlighted the seriousness of the pension problem but stops short of offering a specific plan. Near the end of his term, former Chicago Mayor Rahm Emanuel endorsed a constitutional amendment to control the pension problems of the city and state.
Public pension reform received bipartisan support from state lawmakers and the governor in 2013, but a ruling in 2015 by the Illinois Supreme Court means the only way to achieve it for Illinois state and local governments is through a constitutional amendment. Pension reform that allows control of future cost increases can provide a secure retirement for public employees and protect spending on core services.
But just as important, pension reform can stop property taxes from pushing more residents out of Illinois