Illinois Property Tax Proration Calculator

Illinois Real Estate Tax Proration History

Illinois property taxation traces its origins to the state's first constitution in 1818, which mandated that property be taxed in proportion to its value. For over a century, taxes were billed and collected in the same year they were assessed, meaning the 1932 tax was due in 1932 and the 1933 tax was due in 1933.

That changed permanently in 1934. During the Great Depression, so many Illinois homeowners were unable to pay their property taxes that collection rates collapsed. The legislature responded with what was intended as a temporary one-year relief measure: the 1934 tax bill would not be due until 1935. Taxpayers welcomed the holiday; the system never recovered from it. When 1935 arrived, both the 1934 bill and the newly assessed 1935 bill came due simultaneously. Rather than require two years of taxes in a single year, legislators deferred the problem again, and the pattern repeated. No politician since has been willing to correct it, because doing so would require property owners to pay two years of taxes in one calendar year. As a result, the 1934 "temporary" deferral became permanent, and Illinois has operated on an arrears system ever since. The last year the State of Illinois itself levied a real estate tax was 1930; since then, property taxes have been levied exclusively at the local level, with the Illinois Department of Revenue providing oversight and equalization.

This structural delay is the reason tax proration exists in every Illinois real estate transaction today.

How Illinois Tax Proration Works

Because Illinois taxes are always paid a year or more after the period they cover, a seller at closing has accrued a tax obligation for time they owned the property in the current year, but no bill exists yet to pay it. To resolve this, the seller credits the buyer at closing for those unpaid accrued taxes. The credit is calculated by taking the most recent available tax bill, multiplying it by an agreed proration percentage, typically 105% outside of Cook County and 110% in Cook County to account for anticipated increases, then dividing by 365 to arrive at a daily rate, and multiplying that rate by the number of days the seller owned the property in the current tax year. Cook County properties pay taxes in two installments; most other Illinois counties issue a single annual bill. The proration credit is usually final, though parties may enter into a reproration agreement if the actual bill, once issued, differs materially from the estimate.