Like Benjamin Franklin said, there's nothing more certain in life than death and taxes. But a close runner-up may be homeowners' complaints over the taxes they pay on their property. Their outcry has gotten louder in recent years as escalating home values have led to fast-rising tax bills.
Numerous state governments are trying to answer the so-called tax revolt by increasing exemptions from taxes, putting caps on how much a property is assessed, or in some states, trying to phase out the tax entirely. This comes at a time when property taxes nationally have risen by an average of 13.8% since 2019, according to CoreLogic, and the median price of a single-family home hit $404,400, according to the National Association of Realtors.
North Dakota came the closest to ending property taxes with a ballot referendum in November that voters rejected. But Gov. Kelly Armstrong outlined a plan last month that would accomplish the same thing over the next 10 years through credits to homeowners and annual tax ceilings. In Wyoming, a proposal to replace the property tax with sales taxes failed last year to pass the state legislature. Meanwhile, an Illinois state representative introduced a bill last month to study whether the state should eliminate the property tax and replace it with higher taxes on income.
Experts say the desire to provide relief to owners is understandable, but they warn governments will likely have to compensate for the lost income in some other way to maintain needed services.
“Had North Dakota eliminated the tax, that revenue would have to be made up somewhere, or by some sort of fee structure which could be a property tax under another name. It’s a very dramatic step that could have disastrous consequences,” said Manish Bhatt, senior policy analyst at the nonprofit group Tax Foundation.
Other popular ideas, such as a bill in Texas to increase the amount of a home’s value exempt from taxes to $140,000, have their own drawbacks, according to Bhatt. These “homestead exemptions” can lead to increases in other taxes to make up for the financial loss. For example, Bhatt said shifting the tax burden from houses to commercial buildings could lead to landlords raising rents for tenants.
Illinois' repeated reform efforts
Illinois House Bill 3338, filed by Rep. Thaddeus Jones, requests a study to determine the feasibility of eliminating the property tax system in the state and replacing it with a higher income tax rate. The state has the nation’s second-highest property tax rates, 1.92% of housing value, according to the Tax Foundation.
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Property taxes have increased in Cook County — the state’s most populated county and where Chicago is located — for each of the past 30 consecutive years. The median tax increase for homeowners was 19.9%, according to the treasurer’s office, with 15 of the 30 southside suburbs seeing increases of 30% for the 2023 tax year.
Illinois Realtors CEO Jeff Baker said property taxes in the state impact affordability and keep builders and investors away.
“Our property tax system cripples affordability in Illinois,” Baker said in an interview. “If you are a first-time homebuyer that managed to save up enough for a downpayment on a home — which in and of itself is a challenge — and then come to find out you can’t afford the home because not what the home costs but of how it’s taxed, it drives people away from the idea of homeownership, it drives people out of the state.”
During the last general election, Illinois residents voted in favor of increasing the tax on incomes over $1 million to provide property tax relief.
Rep. Jones filed two additional property tax bills, one calling to create a $5,000 cap for long-term residents and another that creates a pilot program offering tax credits for long-term residents of property specifically in the southside Chicago suburbs.
Despite the ongoing efforts to help Illinois homeowners, Baker said none of them effectively address the cause of the state’s rising taxes. Instead, they serve as loopholes to bringing tax relief.
Experts and Baker note that part of why the state’s property taxes are so high comes down to its large number of local government units, and each with a tax levy. The state has nearly 7,000 government bodies as of 2023, according to the U.S. Census Bureau. Recommendations to consolidate these bodies, or tax districts, were proposed by a recent property tax relief task force.
According to a report by Illinois Policy Institute, a nonpartisan research and advocacy nonprofit group, high percentages of tax dollars received from property taxes went to pensions.
“There’s no shortage of commissions, task forces, work groups, blue ribbon panels over the last 10, 15 years that have looked at this and almost all come back with the same conclusions,” Baker said. “Which is, if you don’t consolidate tax districts, if you don’t rethink school funding formulas, and if you don’t figure out alternative pension funding, then you will not effectively reform how property taxes are handled in Illinois.”
Other efforts have been made in Illinois to conduct studies on property taxes in recent years. In 2019, a law to create a property tax relief task force passed, which became the state's fifth such legislative body between 1982 and 2024 to look into property taxes. That task force created a 36-page report highlighting several adjustments to ease the rate of property taxes.
Another law passed in 2024 called on the state to conduct an independent tax system study that could also identify whether the property tax levy, assessment, appeal and collection process is “reasonable and fair.” The survey is expected to come up with recommendations for improving the property tax process when it is published in 2026.
Assessment vs. levy caps
Increasing the homestead exemption like the one proposed in Texas is one of the most common approaches states are taking. Florida and Georgia both passed measures to increase the exemption in 2024. Many other states are in talks to reform property taxes, all part of the larger conversation on housing affordability.
“We are living through a tax revolt,” David Schleicher, who teaches about property law at Yale Law School, said in a recent social media post. In an interview on the school’s website, he agreed with Bhatt’s view that many of the reforms popular with state legislators “will gum up the property market.”
Caps on assessments are an especially bad idea, Schleicher said, because they may encourage homeowners who might otherwise sell their properties to hold onto them for the lower taxes. That leaves fewer existing homes on the market for younger, first-time buyers.
California’s Proposition 13, passed in 1978, is one of the more famous bills ever passed to limit property tax increases. It’s an example of an assessment cap system, Bhatt said, that disincentives people from selling their homes and also discourages new construction. While the state does allow people in certain cases to transfer their reduced assessments when they buy a new home, he said the policy still favors long-time owners over new state residents.
“With an assessment limit, it’s very possible to have two homes that are virtually identical, built at the same time, with dramatically different property taxes, due only to the date of purchase — the more recent purchaser is paying more,” Bhatt said.
The best policy states could adopt — and quite a few have — is a levy limit, Bhatt argued. Massachusetts is an example of a state with such a limit; under this system, a town can’t increase property taxes by more than 2.5% except through a voter referendum. Otherwise, as property values rise from one year to the next, tax bills will tend to decrease so that the town doesn’t collect more revenue than in the previous year.
“There’s no windfall for government at the expense of homeowners just because of surging values,” Bhatt said.
