Understanding the First Installment Property Tax Bill

February 12, 2016

On January 25, 2016, the office of the Cook County Treasurer mailed the first installment of the property tax bill to all homeowners in Cook County which is due on March 1, 2016. The bill lists all taxing districts to which property taxes are paid. The Treasurer also provides taxpayers with debt and financial information for each taxing agency on the bill. In this blog, we provide an overview of the property tax levy and billing process and an explanation of the components of the first installment of a City of Chicago residential property tax bill.

Levy and Billing Process

In order to better understand the property tax bill, it is necessary to provide a brief description of the levy and billing process. For greater detail, see the Civic Federation Property Tax Primers here. The following section provides some key terms and explanations about the property tax.

The amount of property tax revenue a taxing district requests from taxpayers is the levy. For most taxing districts, the amount of available property tax revenue is an important consideration as they develop their annual budgets. It is important to note that there is a two-year billing cycle for Cook County which creates a one-year lag between the property tax levy and property tax collection. The tax year is the year in which properties are assessed and reflects the value of the property as of January 1 of the same year. Actual tax bills are paid in the next year when the Cook County Clerk calculates new tax rates for each taxing district. So the property taxes collected in the current 2016 calendar year are for taxes levied for tax year 2015.

In Cook County, the annual property tax liability for homeowners is divided into two installments. The first installment for the 2015 property tax was mailed on January 25, 2016, and payment is due on March 1, 2016. The second installment has not yet been scheduled because the tax rate has not been set, but the due date is in Illinois statute and for the last four years has been August 1. The terms “first” and “second” installment are somewhat unclear because they refer to the time of year when the tax bill is received and not to the imposition of a new tax rate. Per State statute 35 ILCS 200/21-30, the first installment payment is calculated by simply multiplying the previous year’s total tax bill by 55%. The new tax rate is calculated in the second installment when the new property values, exemptions and tax rates are implemented. Any changes in property tax levies for fiscal year 2015, e.g., the recent City of Chicago property tax increase, will only affect the second installment.

Reading a Residential Property Tax Bill in Cook County

On January 25, 2016 the First Installment Property Tax Bill for a City of Chicago resident was sent by the Cook County Treasurer. Click the link above to follow along with an example tax bill provided on the Cook County Treasurer’s website. However, note that the bill is for an unincorporated area in Lemont Township and therefore does not have a municipal levy. In order to understand how to read your property tax bill, we describe some of the most important components on your bill. You will see:

1. Total Payment Due: The box that appears in the upper left-hand corner indicates the total amount due for the first installment provided that it is paid on time, i.e., received by March 1, 2016. The 2015 first installment is calculated by multiplying the total tax year 2014 property tax dollar amount by 55%. So if the total tax bill for 2014 was $2,000 a property taxpayer would owe $1,100 [$2,000 x 0.55];
2. Property Index Number: The property index number (PIN) is the unique 14-digit identifier for a parcel of land for taxation purposes and can be found on a property’s deed. The PIN classifies the type of property assessed, e.g., commercial or residential, square footage and location;
3. Code: The tax code at the top of the bill represents all taxing bodies and their tax rates where your property is located. In the City of Chicago, there are seven primary taxing agencies;[1]
4. Paying Late: Pursuant to 35 ILCS 200/21-15, this section lists total payments due if the property tax bill is not paid on March 1, 2016. If the bill is paid late but is between March 2, 2016, and April 1, 2016, the County will charge a 1.5% late interest fee on the original total payment due [($1,100.00 * .015) + $1,100 = $1,116.00]. However, if the payment is made between April 2, 2016, and May 1, 2016, the 1.5% late interest fee is based on the increased payment of $1,116.00, not the original payment of $1,100. If the property tax owner makes a payment after May 2, 2016, the total payment due will be $1,149.73 or [($1,132.74 x .015) + $1,132.74];
5. Tax District Debt and Financial Data: The liabilities of the various governments and their pension funds are printed on property tax bills. The bill identifies total debt and pension liabilities owed by each taxing district. The data are drawn from each government’s audited financial statements. The data include: (1) debt, such as bonds owed by the taxing district; (2) actuarial accrued liabilities for pension and healthcare benefits; (3) unfunded actuarial accrued liabilities for pension and healthcare benefits; and (4) the ratio of the taxing body’s pension and healthcare assets and liabilities which is calculated by dividing actuarial assets by actuarial accrued liabilities;
6. Tax Calculator: This portion of the bill demonstrates how the first installment of the property tax payment is calculated by multiplying the total tax bill from the previous year by 55% pursuant to 35 ILCS 200/21-30; and
7. Remaining Sections: The remaining sections include the property location, mailing address, return address and payment coupon.