Gary H. Smith
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Here’s How Your Property Tax Bill Is Calculated

By Gary Smith
Here’s How Your Property Tax Bill Is Calculated

The dollars collected from property taxes are used to fund a number of state and local services, including education, transportation, emergency, parks, and libraries. How those dollars are calculated involves a variety of entities and a lot of math.

How Levies Are Calculated

There are two parts to a property tax bill, the assessed value, and the total tax rate, or mill rate. The tax rate is the total of all levies from each jurisdiction, which are first calculated separately, and then added together for the entire region.

Illinois currently has more local governments than any other state, with nearly 7,000 independent governmental units operating. Those include counties, school districts, municipalities, fire districts, sanitary districts, parks and local library districts and mosquito abatement districts.

This process starts with each entity creating its budget and then making a formal tax levy request to the county clerk, which is due the last Tuesday in December each year. The county clerk must then calculate the final tax rate needed to generate the amount of dollars levied by the various local governments and determine the total amount that must be raised from that year’s property taxes. This amount is payable the following year.

How the Assessment Process Works

The second part of the property tax bill is the property assessment. The Cook County Assessor’s office is charged with valuing each property within the county. Cook County is divided into three regions—North, South, City—and those regions are on a three-year cycle for re-assessment.

The assessment is based on property value. The assessor estimates the market value of a property using one of three methods: a sales evaluation, cost method, or income method. Sometimes, a combination of all three is used.

A sales evaluation is when the assessor values the property using comparable sales in the area. The cost method is when the assessor determines the property value based on how much it would cost to replace it. The income method is based on how much income a property owner would make if the property was rented. In this method, considerations include the cost of maintaining and managing the property, taxes, and insurance.

Once all property assessments have been completed, the Illinois Department of Revenue issues a state equalization factor, which is applied to each county.

The property assessment is part of the process that property owners can impact by appealing.