Ever opened a property tax bill and thought, “Wait, what year is this for?” You are not alone. Illinois taxes can feel confusing, especially with bills that arrive after the fact and a stack of local districts on one statement. This guide breaks it all down in plain English so you can plan your budget, avoid surprises at closing, and know which exemptions to explore. Let’s dive in.
How Illinois property taxes work
What your property taxes fund
Property taxes help pay for schools, cities and villages, parks, libraries, county services, and other local districts. Several districts can overlap on a single home, which is why your bill shows a mix of line items. The county compiles those levies and creates one combined bill for you.
Billed in arrears
In Illinois, property taxes are typically billed in arrears. That means the bill you receive this year generally pays for last year’s levies and services. This matters at closing because the seller usually gives the buyer a credit for the portion of the current tax year the seller owned the home.
How your bill is calculated
Here is the plain-English flow most homes follow:
- The assessor estimates your market value.
- Illinois applies an assessment level that is commonly about one-third of market value for residential property.
- Any approved exemptions are subtracted from the assessed value.
- Each district sets a levy, which becomes a combined tax rate for your property, often shown as dollars per $100 of assessed value.
- Your tax due is roughly: (equalized assessed value minus exemptions) times the total rate, then divided by 100.
Example only: If your equalized assessed value is $60,000 and the combined rate is $6.50 per $100, your annual tax would be ($60,000 ÷ 100) × $6.50 = $3,900.
Two installments in Champaign County
Many Illinois counties use two installments, and Champaign County follows a two-installment model as of December 2025. Exact due dates and late-payment penalties can change each year. Always check the Champaign County Treasurer or Collector for current dates, interest, and payment options.
What buyers and sellers see at closing
Prorations in plain English
Because taxes are billed later, the closing statement prorates the current year’s taxes between seller and buyer. The seller usually gets a credit for their share of the year they owned the property. The buyer receives that credit and is responsible for paying the bill when it comes due. If earlier-year taxes are unpaid, lenders and title companies typically require payment at closing to clear title.
Numerical proration example
Example only: Last year’s tax was $3,900. You close on October 1. The seller owned the home from January 1 through September 30, which is 273 days. Daily rate is $3,900 ÷ 365 ≈ $10.69. Seller credit = 273 × $10.69 ≈ $2,919. The buyer receives this credit on the closing statement and will pay the full tax bill when due.
Escrows and cushions
If you finance your purchase, your lender may set up an escrow account to collect a portion of annual taxes with your monthly mortgage payment. At closing, lenders often collect an initial escrow deposit, plus a small cushion of up to two months to cover timing gaps. Your monthly PITI payment includes Principal, Interest, Taxes, and Insurance, and the tax and insurance portions can change year to year after escrow reviews.
Assessments and appeals
How your assessment is set
The county assessor estimates the market value for each parcel and applies the statutory assessment level. Equalization factors may be used to keep assessments consistent countywide. Assessment notices are sent on a schedule, and they start the clock for appeals.
How to appeal in Champaign County
If you think your assessment is too high, you can file an appeal with the Champaign County Board of Review. You will typically need evidence such as recent comparable sales, an appraisal, photos showing condition, or calculations that tie assessed value back to market value. If needed, you can seek further review through the Illinois Property Tax Appeal Board or the courts.
Deadlines and evidence basics
Appeals are time sensitive and usually must be filed within a set window after assessment notices are mailed. Pay close attention to county instructions, forms, and evidence requirements. Start early so you have time to gather comps and documentation.
Common exemptions to explore
Owner-occupied homestead
The General Homestead Exemption reduces the taxable assessment for your primary residence. If you just bought your home, apply soon after closing to avoid missing the county’s window.
Senior exemptions and freezes
Programs for older homeowners can reduce taxes or freeze assessed value increases if you meet age and income requirements. Check eligibility and renewal rules before deadlines.
Disability and veteran programs
There are exemptions for disabled homeowners, veterans, and returning veterans. Requirements and amounts vary, so review the criteria and submit the correct documentation.
Improvements and new construction
Some counties offer temporary relief for qualifying home improvements or new construction impacts. The goal is to prevent a sudden jump in taxes from eligible upgrades for a set period.
How to apply and renew
Exemptions usually require an application with the assessor’s office and may need periodic renewal or proof of continued eligibility. Set reminders so you do not miss deadlines.
Budgeting and affordability
Two ways to estimate monthly taxes
- Use last year’s bill. Divide the total by 12 for a quick monthly estimate.
- Use an effective tax rate. Take last year’s tax and divide it by market value to get a rate, then apply that rate to a similar-priced home.
How lenders set PITI and escrow
Lenders estimate your annual taxes and insurance, divide by 12, then add that amount to your monthly mortgage payment. They may require an initial deposit and a cushion at closing. If taxes change or your assessment is updated, the lender will run an escrow analysis and adjust your payment.
Avoid these common pitfalls
- Do not rely only on the seller’s memory. Confirm the most recent tax bill and payment status.
- Plan for the initial escrow deposit at closing. Ask your lender for their estimate early.
- Expect changes after reassessment or levy updates. Build a buffer into your budget.
- Remember that Illinois bills in arrears. This affects proration and who pays which year’s bill.
Quick pre-closing checklist in Champaign
- Pull the latest property tax bill and confirm payment status.
- Ask the seller for proof that prior-year taxes are paid.
- Ask your lender what annual tax figure they are using and how much they will collect for the initial escrow deposit.
- If you plan to claim the owner-occupancy exemption, note the assessor’s application window and apply promptly after closing.
- If you are concerned about your assessment, gather comparable sales or an appraisal and review the Board of Review calendar for appeal deadlines.
The bottom line for Champaign homeowners
Understanding how taxes are calculated, when they are billed, and how they are handled at closing can save you stress and money. A little prep goes a long way, from confirming last year’s bill to planning for escrow and exemptions. If you want a quick read on your likely tax and monthly budget for a specific home, we can help you run the numbers and set expectations early.
Ready to make your next move with less guesswork and more clarity? Reach out to Tracy Slater for a friendly, no-pressure conversation.
FAQs
What does “billed in arrears” mean for Champaign homeowners?
- It means the tax bill you receive this year generally pays for last year’s levies, so at closing the seller usually credits the buyer for the part of the year the seller owned the home.
When are Champaign County property tax installments due?
- Champaign County uses two installments as of December 2025, but specific due dates and late-payment rules can change each year; check the Treasurer or Collector for current schedules.
How are property taxes prorated at an Illinois closing?
- The closing statement typically assigns the seller a credit for their share of the current tax year through the closing date, with the buyer receiving that credit and paying the bill when it comes due.
How do I appeal my assessment in Champaign County?
- File with the Champaign County Board of Review during its annual appeal window and include evidence such as comparable sales, an appraisal, photos, and calculations that show market value.
Which exemptions should I check first as a homeowner?
- Start with the General Homestead Exemption for owner-occupants, then review senior, senior freeze, disability, veteran, and any improvement-related programs you might qualify for.
How do property taxes affect my monthly mortgage payment?
- Lenders estimate your annual taxes, divide by 12, and collect that amount in escrow with your principal and interest; payments can change after escrow reviews if taxes or insurance rise.
