Increased property tax exemptions shifts tax burden without relief

On April 6, 2017, the Illinois House passed HB0156 by an overwhelming vote of 108 to 1 expecting to provide much needed property tax relief in state counties by increasing the value of numerous property tax exemptions.

Basically, the two most substantial exemptions approved would increase the exemption for seniors over the age of 65 to $6000 annually from the current $5000 and the General Homestead/Owner Occupied exemption to $8000 from the current $6000.

Other exemptions increased in the bill would have much less impact on taxing districts or providing needed relief for the typical property owners, in comparison to the number of taxpayers who claim the Homestead and Senior exemptions.

The largest effect of HB0156, which has been sold as “property tax relief,” will not provide the relief desired, but will instead substantially decrease the Equalized Assessed Valuation EAV in taxing districts throughout the state.

First, the $1000 increase in senior exemption in Winnebago County is estimated to reduce the county’s EAV by $24M and the $2000 increase in Homestead exemption would reduce the EAV by an additional $157.8M – a combined loss in EAV of $181.8M.

Regardless of the increase in exemptions and the corresponding decrease in EAV, the taxing districts, subject to the Property Tax Extension Limitation Law PTELL or tax caps, will not be affected by HB0156.

Under tax caps, the schools, city, county and other taxing districts are allowed to increase their tax rate, without voter approval, to receive the same tax levy they received the previous year plus the annual rate of inflation if they so choose.

Therefore, due to the effective elimination of taxable residential property value under HB0156, the tax rate in the Rockford area would increase to $15.7978 from the current rate of $15.1059, an increase of 4.58% to make up for the EAV loss.

The taxes paid by those not receiving the exemptions, non-homestead property (including all commercial and industrial property, non-owner property, vacant land, some rental properties and even seniors with frozen assessments) – over 43,000 in all, would pay 100% of the increased property tax of 4.58% as a result of HB0156 becoming law.

Approximately, 18,000 additional properties would pay up to 4.58% increase from this year’s taxes. Some would not be affected at all, since the home’s value is less than the increased exemptions, such as $18,000 to $33,000 homes, which have EAVs of $6000 for Homestead exemptions and $11,000 for some senior homeowners.

Various property values as presented in the Table show that a $50,000 property would receive a tax reduction of $242.15 with the new Homestead exemption, while the senior with both exemptions would receive a tax reduction of $434.73, more than the $421.27 property taxes actually paid on the property using the two higher exemptions.

The Table also shows the trend that as the property values increase to $150,000, the tax reduction will shrink to only $11.52 with the Homestead exemption and at $200,000 the property tax actually begins to increase from the previous year to $103.80 and $219.11 at $250,000 with HB0156.

Similarly, the senior property still receives a tax reduction of $204.09 on a $150,000 property, but continues to decrease at the higher property values until reaching $250,000, when the senior also pays a higher tax of $26.54 due to HB0156 passing.

The Table demonstrates that some properties do indeed receive a reduction in taxes, but as a result of this legislation, more than half of the 122,000 parcels in Winnebago County, some 65,000 to 75,000 are either unaffected or actually pay up to 4.58% in higher property taxes with HB0156.

Under PTELL, the taxing districts still have the same property taxes to spend as the previous year; the tax dollars have simply been shifted from the groups who have the exemptions to those who do not. However, even some properties with the higher exemptions still may pay increased property taxes!

The Illinois Senate should consider these facts before supporting this legislation. If the General Assembly wants to provide genuine property tax relief, then their unfunded mandates to local taxing districts should be reduced.

With the resulting tax rate then approaching 16% in our area, existing businesses have another reason to leave, and those businesses that may be considering a move to Illinois would be doubling down on the fact that their commercial and industrial property taxes would be higher as a result of HB0156.


Table Home values and tax results





Property Tax




Property Tax



$18000 $0.00 $0.00 $0.00 $0.00
$33,000 $473.93 ($281.36) $0.00 $0.00
$50,000 $1369.14 ($242.15) $421.27 ($434.73)
$100,000 4002.11 ($126.84) $3054.24 ($319.41)
$150,000 $6635.08 ($11.52) $5687.21 ($204.09)
$200,000 $9,268.04 $103.80 $8320.17 ($88.78)
$250,000 11,901.01 219.11 $10,953.14 $26.54


Increase/Decrease = (value x) taxes reduced,       value x, – taxes increased

Calculated with Homestead Exemption of $8,000, with Senior Exemption of $14,000

Calculated with Tax rate increased to $15.7978, 4.58% above 2017 tax rate of $15.1059