Cook County Property Tax Reform Group Announces First-Ever Study on Homestead Exemptions

Mon, 01/15/2024 - 12:00

Researchers’ Analysis Reveals Homestead Exemptions Deepen Inequities in Some Cook County South and West Suburbs

(Cook County, IL) - The Cook County Property Tax (PTAX) Reform Group, in partnership with the Chicago Metropolitan Agency for Planning (CMAP) and the University of Illinois Chicago (UIC) Government Finance Research Center, released results of a first-ever study on property tax homestead exemptions. The study finds that while property tax homestead exemptions offer property tax relief to individual homeowners, the use of exemptions can have unintended consequences by raising tax rates for all property owners, even those who receive exemptions.

In some of the South and West Suburbs, the rise in property tax rates due to homestead exemptions is disproportionately and significantly higher than it is for the rest of Cook County.

For example, in Park Forest, the tax rate increase for all property owners due to exemptions is ten times higher than the median among Cook County municipalities. The map of Cook County communities that are impacted the most by homestead exemptions is very similar to other maps that have depicted inequities and historic disinvestments in the past.

While homestead exemptions are not the only reason tax rates might increase – loss of productive, taxable property and higher levies from local governments sometimes might also play a role – this study focused on the portion of certain municipal tax rate increases that were mathematically attributable to homestead exemptions.

The Cook County PTAX Reform Group is made up of the Cook County Offices Under the President, the Cook County Assessor’s Office, Cook County Clerk’s Office, Cook County Board of Review, Cook County Treasurer’s Office, and the Cook County State’s Attorney’s Office. The group works collaboratively to share resources, develop strategy, and work toward a more equitable, efficient, and accessible system for all Cook County residents and businesses. The study was funded by Cook County as a long-term investment to advance equity and support vital communities, as outlined in the Cook County Policy Roadmap.

More specifically, the following findings came from this study:

Inequitable Consequences

While homestead exemptions are a necessary part of property tax relief, the consequences of them vary widely within Cook County, depending on the average property value, land use mix, and other characteristics of the taxing district. The South Suburbs are particularly affected.

Erosion of Savings

All homeowners benefit from taking advantage of available exemptions. But nearly all save less than anticipated, and some save much less than anticipated. A higher tax rate due to exemptions applies to all property owners in the taxing district, even those claiming the exemptions. While homeowners pay taxes on a smaller portion of their home’s value, the tax rate applied is often higher. This erodes the savings for homeowners and raises costs for businesses, especially in areas with limited capacity in their tax base.

Shifting the Burden

Exemptions lower residential tax bills by shifting the burden to other property owners through higher tax rates. The tax burden is shifted primarily to owners of commercial and industrial properties in the same taxing district and (less so) to multifamily housing where renting is common.

To apply these findings to reform efforts, the research recommends the following actions: using these findings to work with the public and legislators on meaningful property tax reform; evaluating future proposals for homestead exemptions with these learnings in mind; and pursuing other non-exemption forms of property tax relief. The Cook County PTAX Reform Group will continue to work with communities and officials to pursue policy change recommendations.

The full study is available upon request.

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About Cook County Office of the President

Cook County is the second largest county in the United States representing 5.2 million residents in Illinois. The President of the Cook County Board of Commissioners is the chief executive officer (CEO) of Cook County and oversees the Offices Under the President and presides as president of the Forest Preserves of Cook County.

About UIC Government Finance Research Center

The Government Finance Research Center at the University of Illinois Chicago (UIC) shapes and informs public policy on government and public finance by identifying, planning, and executing research, providing reports and informed analyses, delivering educational opportunities and technical training, and offering inclusive venues to convene national and local discussions on fiscal and governance issues.

About CMAP

The Chicago Metropolitan Agency for Planning (CMAP) is northeastern Illinois' comprehensive planning organization. The agency and its partners developed and are implementing ON TO 2050, a long-range plan to help the seven counties and 284 communities of our region address transportation, equity, the environment, and other quality-of-life issues.