Due to a heavy debt load and a state law requiring Chicago to dramatically increase its contributions to police and fire pension funds, the City of Chicago recently passed a $543 million property tax increase, plus an additional $45 million property tax increase for the construction of new schools. The increase will occur over the 2015–2018 tax years, with the largest increase of $363 million impacting the 2015 tax year (taxes payable in 2016). Additional property tax increases will also occur for tax year 2016 (payable 2017) of $109 million, for tax year 2017 (payable 2018) of $53 million, and for tax year 2018 (payable 2019) of $63 million. This is being presented to taxpayers as a $543 million tax increase. However, compounding the annual increases will result in a cumulative tax increase of close to $2 billion over the four-year period.
Ryan’s initial research indicates that 2015 property tax bill increases will vary as a result of the overall 2015 triennial reassessment of Chicago. The potential impact on the 2015 tax rate could be minimal, but the overall effect on taxes may be significant. Overall, tax bills could potentially increase from 10% to 40%, or higher, depending on how specific properties are reassessed. In general, Ryan anticipates properties located in the Chicago central business district will experience the largest tax increases.
The Chicago Mayor’s Office is currently seeking state legislation that would increase the homeowner’s exemption on residential properties and thereby exempt most Chicago homeowners from the tax increase. This would potentially shift the entire tax increase to business owners, creating even larger tax bills.
It is imperative that business owners aggressively contest their 2015 assessments to minimize the impact of the tax increase. Ryan will post updates as more information becomes available.
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