Property tax burden in the Chicago region

The tax structure affects a government’s ability to attract and retain businesses and provide public services for its residents. Each of the hundreds of local governments in northeastern Illinois differs in its tax base, service and infrastructure needs, and ability to generate local revenue, which can create inequities in residential property tax burden. Some residents with lower ability to pay have higher tax burdens. Areas with high tax burdens may need reinvestment to build the tax base, while more structural solutions may aid other parts of the region. Previous CMAP analyses decoded the region’s property tax system, highlighting how property tax rates are determined as well as how the classification system in Cook County affects tax rates. This policy update examines effective property tax rates and assesses inequities in the amount residential property taxpayers pay.

Arial view of a small lake and houses.

The analysis indicates that Cook County’s property tax assessment classification system results in a higher tax burden on commercial and industrial property taxpayers relative to residential properties. This system creates a barrier to reinvestment in some disinvested areas in Cook County, with high rates potentially limiting investment and keeping the tax base from growing at the same rate as public service needs. At the same time, many residents experience high property tax burdens relative to their income levels.

Structural solutions — including the gradual phasing out of Cook County’s classification system — can address these inequities. Reforming current tax policies to be more efficient and supportive of reinvestment will improve services and quality of life, keep the region competitive, and promote tax base growth. Growth in the tax base over time will reduce the tax burden on residents, mitigating the increased residential rates that would occur due to phasing out classification.