Chicago's Sky-High Commercial Property Tax Rate and Other New Facts in Updated Primer
Chicago has the highest effective commercial property tax rate among the largest U.S. cities, according to a 2024 study by the Lincoln Institute of Land Policy and the Minnesota Center for Fiscal Excellence.
The tax rate on retail, restaurant and office buildings was nearly 4.1% — meaning a commercial property owner in Chicago paid 4.1% of the value of their property to the tax collector in a single year. As a result, commercial property owners over 25 years could pay as much in taxes as they initially paid for the property itself.
Above: In this graphic from the "50-State Property Tax Comparison Study" by the Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence, the groups calculate the taxes paid in large cities by commercial properties valued at a total of $1.2 million that includes the value of both the properties and their fixtures. (The effective tax rate on Illinois' industrial properties was nearly 2.5%, the second highest in the nation, and the effective tax rate on homes was more than 1.5%, the 12th highest in the nation.)
That finding — the most current available — and others are noted in the latest update of Cook County Treasurer Maria Pappas' property tax primer, "How the Illinois Property Tax System Works."
The updated property tax primer also includes new details about the fairness of assessments in Cook County and notes significant changes to the Illinois Property Tax Code made at the urging of Pappas.
In addition, facts and figures have been updated to reflect the most current available data. The document also has been enhanced with improved graphics and streamlined footnotes.
Another significant change in the primer: the order of the annual property tax-setting process was altered to reflect the fact that many local governments set their annual levies — the amount they seek to collect in taxes from homeowners and businesses — before the rest of the tax process even starts. So, in the primer, setting the levy was moved from the fourth step in the process to the first.
The fact that this is a living document — updated annually — separates it from other, similar primers, which tend to be updated much less frequently, if at all.
Pappas' primer also explains why property taxes in Illinois are so high compared to other states (hint: low state education funding, massive unfunded public pension debt and the most local government agencies of any state).
Treasurer Pappas hopes this updated primer continues to help taxpayers understand a complex system that her office has described, by reappropriating Winston Churchill's comments on Soviet Russia before World War II, as "a riddle, wrapped in a mystery, inside an enigma."