How high are Chicago property taxes?
The state of Illinois is known for its high property taxes. Illinois currently holds the second highest median property tax rate in the country at 2.32%. The national average property tax rate is 1.13%. Only New Jersey’s median tax rate of 2.38% is higher. Compared to the rest of the state, Chicago property taxes are relatively low. Even after Mayor Emanuel pushed a drastic property tax hike through the Chicago City Council, Chicago’s median property tax of 2.10% remains lower than the state’s median. However, if you want to work in Chicago, but live in the suburbs it will cost you. The median tax rate for all of Cook County is a whopping 3.44%. The collar counties of Will, DuPage, Kane, McHenry, and Lake are similar. DuPage County has the lowest median property tax of any of Chicago’s suburb counties at 2.75%, while McHenry has the highest at 4.02%.
Are these high property taxes the norm for counties containing or surrounding large cities or is Chicago’s effect an aberration? Let’s find out.
How does the Chicago property tax compare to other Midwestern cities?
Perhaps high property tax rates are a regional concern. If this is the case, then we should expect to see high property tax median’s in the other major Midwestern cities of Indianapolis, Columbus, Detroit, Milwaukee, and Kansas City. Each of these cities are significantly smaller than Chicago, but they are the largest Midwestern cities. Detroit, Michigan is a part of Wayne County. It has the highest median property tax rate in the Midwest besides Chicago at 2.76%. Milwaukee, Wisconsin and Milwaukee County come a close second at 2.40%. Columbus, Ohio and Franklin County just barely drop below 2% at 1.96%. Kansas City’s median property tax rate is 1.59%. Lastly, Indianapolis, Indiana and Marion County have the lowest median property tax rate of the Midwestern cities at 1.08%.
While all the Midwestern cities except Indianapolis have a higher property tax rate than the national average, none come close to Cook County’s 3.44% and only two are higher than Chicago’s 2.10%.
How does the Chicago property tax compare to other populous U.S. cities?
Chicago is the third most populous city in the U.S. Higher populations mean greater need for infrastructure, schools, and public amenities. Property taxes often provide the funds for these citywide needs. Perhaps Chicago’s size is the reason for its high property tax rate. If this is true, then other large U.S. cities should have similarly high property taxes.
New York City is the most populous city in the U.S., yet its county median property tax rate is 1.93%. L.A. is the second most populated city and its county median property tax rate is a shockingly low 0.79%. Houston is the fourth largest U.S. city and it has the closest county rate to Cook County’s at 2.29%. Finally, Philadelphia, which is the fifth most populous city in the U.S., falls in the middle of large city county property tax rates at 0.93%.
It could be that these large cities are making up for lower property tax revenue with higher sales taxes. However, Chicago also has the nation’s highest sales tax at 10.25%, while the other large cities have sales tax rates between 8% and 9%. It is likely that Illinois’ relatively low state income tax has something to do with the higher property taxes. Illinois has a flat income tax rate of 3.75%, while New York and California have a graduated income tax rate of 6.45% and 9.3% respectively for the median household income of $50,000. If you want to live in a large U.S. city with low income taxes, but high property and sales taxes, then Chicago is the city for you.
How does the Chicago property tax compare to other U.S. cities with a similar growth rate?
A city’s growth rate can tell you a lot. If the city is growing chances are that the economy and housing markets are also growing. If people are leaving the city the houses will probably be cheaper, but the likelihood that you’ll get your money back if you sell in the future significantly decreases. Experts debate the impact taxes such as property taxes have on city growth rates. On the one hand, higher property taxes might scare away potential residents. On the other hand, higher property tax revenue means more money for the city to spend on things that attract city-dwellers like great schools, reliable infrastructure, and the newest public amenities.
So do property taxes have anything to do with city growth rates? To find out let’s look at cities with similar growth rates to Chicago.
Chicago is currently the 25th fastest growing city in the nation. San Francisco, Oregon’s Portland, North Carolina’s Raleigh, Oklahoma City, and Boston all are similarly ranked. San Francisco has the lowest property taxes of the group with 0.67%, while Portland, Oregon has the highest median property taxes at 1.08%. All of these similarly growing cities have property tax rates far below Chicago’s and Cook County’s property taxes. It can be inferred then that Chicago’s growth is isolated from the impacts of high property taxes. People aren’t coming to Chicago for the property tax rate, but for the culture and economic opportunities it provides.
2 Point Highlight
Even after Mayor Emanuel pushed a drastic property tax hike through the Chicago City Council, Chicago’s median property tax of 2.10% remains lower than the state’s median.
If you want to live in a large U.S. city with low income taxes, but high property and sales taxes, then Chicago is the city for you.
