News Updates

Incentive classification: strengthening a valuable tool for municipalities and developers

More than 90 municipalities in Cook County use incentive classification to lower businesses’ property tax bills and support development. These incentives (which are unique to Cook County) reduce the level of tax assessment on commercial and industrial properties from a standard 25 percent to 10 percent, typically for 10 years with a 2-year phaseout. Doing so removed $7.58 billion (11 percent) of businesses’ property value from taxation in tax year 2022. This is a significant investment in the region’s goals for inclusive economic and community growth.

Local officials view incentive classification as one of few available tools to meet residents’ development needs. But they also cite recurring challenges. County leaders are unclear if or how the incentives achieve their objectives, and many stakeholders are frustrated by the difficulty of deploying them. A new report, Opportunities to revamp Cook County’s incentive classifications, addresses these concerns and outlines more than 30 potential actions to improve the program.

Incentive classification is primarily used to encourage investment in industrial land and historically disinvested communities in the south and west suburbs, although commercial projects are a faster-growing segment of incentive activity. This use has also increased over the last 10 years, both by the number of awards and total value. The fair market value of businesses with an incentive — that is, the reasonably expected value before property is assessed for tax purposes — has more than doubled since 2011. But the outcomes (like resulting changes in property value, investment, or jobs) are unclear and difficult to verify. 

Stakeholders at all levels see potential in revamping how the program is structured and administered. More than 40 interviews revealed a bureaucratic structure that has become difficult to navigate, opaque to outsiders, and fractured across different public offices. To apply for an incentive, property owners may work with as many as 5 public offices, need up to 6 votes by 4 public bodies, and pay more than $8,000 in fees (not including legal and consulting fees) across a process that can take up to 2-3 years from start to finish. 

The report draws on insights from stakeholders to identify strategies aimed at maintaining local flexibility while increasing regional impact. These range from staff-led adjustments to broader structural reforms. The analysis also includes: 

• Three main paths forward for county leadership action
• A look at where incentives are used most heavily  
• An analysis of how the fiscal effects vary depending on local tax bases 
• A step-by-step process map detailing how applications move through review, approval, and activation by the county 

Learn more by reading a summary of the incentive classification analysis.

About the project

Cook County’s elected leaders are taking an in-depth look at how the property tax system affects taxpayers and communities that need services to thrive. From 2023 to 2025, the Chicago Metropolitan Agency for Planning and the University of Illinois Chicago Government Finance Research Center partnered with the Cook County Office of the President to inform the Property Tax Reform Group’s ongoing discussions. Check out the team’s previous in-depth look at homestead exemptions and how they affect taxpayers and taxing districts differently across the county.