My assessment went up 30%, why didn’t my taxes go up the same amount?

Let’s start with how your property tax bill is calculated. It’s all spelled out on your actual property tax bill, in great detail. It’s complicated, there’s assessed values, tax rates, something called an ‘equalization factor’, an odd thing where you are only taxed on 10% of your assessed value, and then various exemptions and freezes.

I’m actually not going to talk about all that. For the most part, it’s absolutely irrelevant because it’s focused on tax rates, and rates are mostly meaningless in Illinois. * 

There are places in the US that set a tax rate, and just collect whatever fraction of the property value that rate allows. This can lead to wild swings in income from year to year (think 2009 great recession). We don’t do it that way. 

All of the taxing bodies in Oak Park tax in dollar amounts. That is, they submit a request to the Cook County treasurer to levy a property tax in good old US dollars. For example in 2023, the Park District of Oak Park asked for, and got, $12.3 million.

How do we divvy up these taxes across all of the homeowners that pay property taxes? You calculate the fraction of the assessed property value of Oak Park that you own, and you pay that fraction of the taxes. **

Here’s an example. Suppose you own a home that is worth $100k, and the total assessed property value of Oak Park is $1 billion. You own 1/10000th, or 0.01% of the property in Oak Park. So you pay 0.01% of the total taxes levied by all taxing bodies. If they levy a total dollar ask of $10 million, your tax bill would be 0.01% of $10 million, or $1,000. These are just made up numbers, but the principle is the same for actual property taxes and values.

I didn’t use a tax rate to calculate this example because tax rates are backed into from the levy amount. They calculate a tax rate that will raise the correct amount of money in the levy ask, based on the total assessed value of all properties. The tax rate (mostly*) cancels out in the calculation, and you are just left with your taxes being proportional to your fractional property value. Again, the tax rates are mostly meaningless.

This also explains why the recent reassessment, where the average home in Oak Park increased about 30% in value, didn’t result in massive tax increases. Remember, all of the taxing bodies didn’t just suddenly ask for 30% more money, they all asked for slightly more than they’d asked for the year before the reassessment. Total taxes went up just a bit, not 30%. 

Because the total assessed value of Oak Park homes increased by 30%, a home owner whose assessed value increased by 30% would still own the same fraction of total property value. Your pie wedge grew by 30%, but because the pie grew 30%, you still own the same fraction of the pie, and pay the same fraction of taxes.

* - Where tax rates aren’t meaningless is in the calculation of exemptions, which are inserted into the middle of the tax calculation as flat dollar amounts. They throw the math off a little bit, but for the most part your tax bill is proportional to your fractional property ownership.

** - There’s an additional complication that the residential and commercial real estate pies are sized differently, so my math here really only applies within each pie. You pay the fraction of the taxes allocated to the residential pie, in proportion to your fractional ownership of residential property.