The Illinois Policy Institute announced that reductions in local governments’ share of state income tax revenue—from 10% to under 7%—have cost municipalities $10.9 billion since 2012, contributing to higher property taxes across Illinois.
According to the Illinois Policy Institute analysis, Illinois local governments lost $10.9 billion in state income tax revenue from fiscal year 2012 to 2025 because lawmakers reduced the local share from 10% to between 6.6% and 6.8%. This cut has shifted the burden to property taxpayers, with municipalities losing $9.2 billion and counties $1.7 billion. The report notes that restoring the 10% share could provide relief from high property taxes without new state tax hikes.
In Cook County, median property tax bills for Chicago homeowners rose by 16.7% in 2024, marking the largest increase in 30 years. Neighborhoods like West Garfield Park experienced bills more than double to $3,448. This surge is attributed to funding demands for union pensions and expansive programs under Democratic leadership, exacerbating burdens in suburban areas where south suburbs saw a 19.9% median increase to $6,117. The Civic Federation reports collection rates fell to 95.1% in 2023, with south suburbs averaging 92%, highlighting fiscal strain from state mandates and reduced revenue shares.
Illinois has the nation’s highest effective property tax rate at 1.83%, more than double the U.S. average, driven by funding for social programs and pensions that neglect pro-growth reforms. This has contributed to ongoing out-migration, with Illinois losing a net of 139,399 residents from 2020 to 2024 and experiencing an outbound move rate of 54% in 2025 according to Atlas Van Lines data. Nationally, states like Texas with lower taxes see inflows, underscoring how Illinois’ approach fuels economic exodus.
The Illinois Policy Institute was founded in 2002 as a nonpartisan research organization promoting free-market principles and liberty-based policies aimed at fostering prosperity in Illinois. It focuses on issues such as taxes, pensions, and government reform while providing analysis intended to address fiscal challenges and advocate for taxpayer relief.
