Study finds Illinois relies on property taxes more than most other states

Written By Scot Bertram, The Center Square, June 22, 2020


(The Center Square) – A new report places Illinois among the states most reliant on property taxes for revenue.


According to 2017 figures, the most recent data available, compiled by the Tax Foundation, Illinois ranks 11th in that category and no better in other areas.


“No matter how you’re comparing on property taxes, Illinois is always near the top,” said Janelle Cammenga, a policy analyst with the Tax Foundation’s Center for State Tax Policy.


She pointed to two previous studies conducted by the organization to support the claim.


“Back in March, we did a [study] comparing property tax collections per capita in fiscal year 2017,” Cammenga said. “Illinois actually ranked No. 8 in the U.S. on that one and it was No. 1 in the Midwest. Another measure looked at property taxes paid as a percentage of housing value. On that one, Illinois is second in the nation at 2.05%.”


Cammenga said property taxes are just one piece of the puzzle, and other states more reliant on property taxes for revenue still end up having a better overall tax climate than Illinois.


“New Hampshire, for example, basically forgoes both income tax and a sales tax,” Commenga said. “Whereas Illinois has all of the major taxes and their sales tax rates are a sixth highest in the nation, if you look at average state and local rates as well. Illinois is seeing a high tax burden overall in addition to their high property taxes.”


She said these tax policies have consequences for local communities across the state.


“In terms of property tax reliance, it’s important to remember that if you have a smaller amount of that local revenue through property taxes, then localities are going to be more dependent on the state to fund their local functions,” Commenga said.


According to the report, New Hampshire, Alaska and New Jersey were most reliant on property taxes for state revenue, while Arkansas and Alabama ranked at the bottom of the list.