Illinois tax comparison
Illinois transfer tax vs. property tax
A closing can include transfer tax, a property-tax payoff and a property-tax credit. Those entries do different jobs. Transfer tax concerns the ownership event. Recurring property tax concerns the parcel and its tax year. Identify the tax first, then choose its base, rate and treatment on the closing statement.
Last reviewed:
The short answer
Illinois state transfer tax is $0.50 for each $500 of taxable value or fraction. An applicable county tax under Section 5-1031 adds $0.25 per $500 or fraction; municipal charges are separate. Recurring property tax uses taxable equalized assessed value, or EAV, and the local aggregate rate. A transfer-tax exemption does not erase the parcel's property-tax bill. A property-tax credit at closing allocates cost without, by itself, paying the collector.
Reviewed October 24, 2026. This comparison fits Illinois III.C, Transfer taxes, and III.F, Real estate taxes and exemptions, in the June 24, 2026 PSI broker outline. The whole Additional Illinois Laws domain is 10 of 40 scored state questions, not a quota for this page. The Chicago illustration is local; all example bases, assessment figures and contract terms are expressly supplied, not a tax quote for a particular property.
Choose the tax before choosing the formula
- Identify the event. Section 31-10 taxes specified transfers of title, beneficial interests and controlling interests in real estate entities, whether or not a document is recorded. A transfer tax is not automatically an annual charge or limited to a conventional deed. Property tax follows its recurring local cycle even when no sale occurs.
- For state transfer tax, establish the taxable value first. Section 31-5 uses full actual consideration, including assumed liens, while Section 31-10 has the stated subject-to-mortgage exclusion. PTAX-203 instructions govern the reported adjustments. Do not simply subtract the seller's loan payoff, the buyer's new loan, all closing costs or an invented personal-property allocation.
- Then count $500 units. Divide the stated final taxable value by $500, count every fractional unit as a full unit and multiply by $0.50 for the state layer. If the county layer applies to the same base, calculate it at $0.25 per unit. At exact $500 units, the state rate equals 0.1%, but do not use that shortcut to skip the fractional-unit rule. Municipal bases, rates, exemptions and liable parties need their own rule.
- For ordinary property-tax exercises, follow the value chain. Market value times the supplied assessment level gives assessed value; apply the applicable equalization factor, subtract qualifying EAV exemptions, then apply the aggregate local tax rate. If assessed value or taxable EAV is already supplied, do not assess or exempt it again. Cook classification, farm valuation and other statutory methods mean one assessment percentage is not universal.
- Keep three decisions separate: tax, declaration and payment evidence. Some exempt transfers still require a declaration. When Section 31-25 requires one, the timing is presentation for recording or within three business days after the transfer is effected, whichever is earlier. Sections 31-5 and 31-15 provide for electronic revenue stamps or alternative indicia after the paper-stamp phaseout; a declaration form and a stamp are not the same thing.
- Read the tax year and the contract at closing. Illinois generally assesses one year and calculates and collects the bill in the following year. The contract supplies the estimate, day count, closing-day allocation and any reproration. A seller debit and buyer credit for accrued unpaid taxes allocate cost; they do not necessarily send money to the county.
- Distinguish a tax exemption, a lien and a negotiated cost allocation. State transfer exemptions can also affect the county tax under Section 5-1031, but do not automatically determine a municipal charge. Property-tax exemptions have separate eligibility and effects. Section 21-75 describes the parcel tax lien from January 1 of the levy year; a sale or transfer-tax exemption does not itself settle an outstanding parcel-tax obligation.
| Question | Illinois transfer tax | Recurring property tax |
|---|---|---|
| What triggers it? | The specified taxable transfer, including covered interests | The local assessment and levy cycle; a sale is not required |
| What is the base? | Stated taxable transfer value after applicable adjustments | Taxable EAV for the ordinary calculation |
| What is the rate? | State $0.50 per $500 or fraction; applicable county and municipal layers separate | Aggregate local district rate, not one statewide bill rate |
| How does rounding work? | Count every partial $500 unit; follow declaration line-rounding instructions too | Follow the stated exercise and bill conventions; keep intermediate precision |
| What proves or reports it? | Required declaration and authorized revenue-stamp payment evidence | Assessment record, tax bill and payment record |
| When is it due or collected? | Transfer and recording/declaration rules apply | Generally assessed one year and billed the next |
| Does exemption mean no filing? | Not always; the particular exemption controls declaration requirements | Qualification and applications follow the particular property-tax relief |
| What can appear at closing? | A charge allocated under applicable law and the contract | Payoff, proration credit, tax reserve or lender escrow, depending on the facts |
| Does the closing entry pay the authority? | Only the actual remittance/payment process does | A buyer proration credit alone does not pay the county |
| Does one tax's exemption remove the other? | No automatic recurring-property-tax exemption | No automatic transfer-tax exemption |
The distinctions that matter
| Distinction | How it works | What to notice |
|---|---|---|
| Transfer value vs. taxable EAV | The transfer calculation uses its specified consideration/value base. The property-tax calculation uses assessed and equalized value after the applicable exemptions. Sale price does not replace taxable EAV. | Name the denominator before applying a rate. |
| Outstanding subject-to mortgage vs. seller payoff | The state exclusion requires the transferring document to state the property or interest is transferred subject to the mortgage remaining outstanding. Paying off and releasing the seller's loan is a different fact. | Does the mortgage remain on the transferred property? |
| $500 unit rounding vs. rounding declaration lines | The statute counts a fractional $500 unit. PTAX-203 instructions separately round Lines 11 through 18 to the next highest whole dollar. Work from the required reported figures; do not substitute ordinary nearest-dollar rounding. | Which stage of the calculation is being rounded? |
| Exempt transfer vs. declaration-free transfer | Section 31-45(b), for example, generally preserves a declaration for covered governmental or charitable transfers, subject to its exception. An actual-consideration-under-$100 exemption has a different filing treatment. | Read the exemption letter and the filing exception. |
| State/county rules vs. municipal rules | Section 5-1031 carries specified state exemptions into the county layer. A municipal ordinance can define different thresholds, charges and liable parties. Chicago's less-than-$500 exemption is not the state's less-than-$100 provision. | Exemption from which government's tax? |
| Legal liability vs. contract reimbursement | A purchase contract can allocate an economic cost between buyer and seller. That agreement does not rewrite an ordinance's taxing-authority liability. Chicago expressly assigns its City and CTA portions with stated exceptions. | Who owes the authority, and who bears the cost under the contract? |
| Proration credit vs. tax payoff or lender escrow | A proration credit reimburses the buyer for the seller's stated unpaid ownership period. A payoff sends money to satisfy a tax obligation; lender escrow reserves money for later bills. Do not count one as all three. | Trace where the money actually goes. |
| January 1 lien date vs. payment deadline | Section 21-75 dates the statutory lien from January 1 of the levy year. That is not the installment due date or proof the tax has already been billed or paid. | Lien attachment and collection timing are separate. |
Work through the facts
State and county on the same stated base
Final taxable value is $412,250. The question states that the state and $0.25 county layers apply to that same base, with no municipal charge or exemption.
- $412,250 / $500 = 824.5, so count 825 units.
- State: 825 x $0.50 = $412.50.
- County: 825 x $0.25 = $206.25.
Answer: The stated combined tax is $618.75. Do not round 824.5 down.
One dollar crosses the unit boundary
Final taxable value is $300,001 in a nonexempt transaction. Only the state tax is requested.
- $300,001 / $500 = 600.002.
- Count 601 units, rather than rounding to the nearest integer.
- 601 x $0.50 = $300.50.
Answer: State transfer tax is $300.50.
An actual subject-to exclusion
The transferring deed states the property remains subject to a $90,000 mortgage outstanding at transfer. The already reported full consideration is $340,000, including that amount. No other adjustment or exemption applies.
- The stated document and continuing mortgage support the Section 31-10 exclusion.
- $340,000 - $90,000 = $250,000.
- $250,000 / $500 x $0.50 = $250.
Answer: State transfer tax is $250 before separate applicable layers. Do not deduct the mortgage twice.
A payoff is not the same exclusion
Full taxable consideration is $340,000. The seller uses proceeds to pay and release a $90,000 mortgage; the buyer does not take subject to it. No other adjustment or exemption applies.
- The seller's payoff reduces sale proceeds, not this stated tax base.
- The required continuing subject-to condition is absent.
- $340,000 / $500 x $0.50 = $340.
Answer: State transfer tax is $340, not $250.
Chicago City and CTA portions only
Assume a nonexempt $350,000 Chicago transfer price with neither party qualifying for a liability-shifting exception. Calculate only the City and CTA portions under Section 3-33-030.
- There are 700 complete $500 units.
- City portion: 700 x $3.75 = $2,625, with primary incidence on the transferee under the stated facts.
- CTA portion: 700 x $1.50 = $1,050, payable by the transferor under the stated facts.
Answer: The two Chicago portions total $3,675. This is not a quote including every state, county or closing charge. State and county taxes, if applicable, must be calculated separately.
Tax from supplied assessed value
Assessed value is $120,000. The supplied applicable equalization factor is 0.95, the qualifying EAV exemption is $6,000 and the aggregate rate is 8%. These are teaching assumptions, not county-wide exemption limits.
- $120,000 x 0.95 = $114,000 EAV.
- $114,000 - $6,000 = $108,000 taxable EAV.
- $108,000 x 0.08 = $8,640.
Answer: The simplified recurring property tax is $8,640. Do not multiply the assessed value by an assessment level again.
Taxable EAV is already the starting figure
The question gives taxable EAV of $96,000 and an aggregate rate of $7.50 per $100. It does not call for another exemption or assessment calculation.
- $7.50 per $100 is 7.5%, or 0.075.
- The base is already taxable EAV.
- $96,000 x 0.075 = $7,200.
Answer: The stated tax is $7,200, without another assessment or exemption deduction.
A 2026 accrued-tax credit
Estimated annual property tax is $7,300. Closing is April 11, 2026; the buyer owns closing day. The contract uses actual days over 365, and the seller's accrued share is unpaid.
- The seller period is January 1 through April 10: 100 days.
- $7,300 / 365 = $20 per day.
- 100 x $20 = $2,000.
Answer: Debit the seller and credit the buyer $2,000. The later county bill still requires payment.
An exempt event with an outstanding parcel bill
A deed qualifies for an applicable transfer-tax exemption. The property still has an unpaid recurring tax bill, with no relief from that parcel obligation established.
- The transfer exemption addresses the specified ownership event.
- It does not establish payment of the parcel bill or remove its tax lien.
- Declaration requirements must also be checked independently.
Answer: Handle the unpaid property taxes and required filings separately from the transfer-tax exemption.
A tax-exempt transfer can still require a declaration
A transfer qualifies under Section 31-45(b), is not the stated Veterans Affairs foreclosure exception, and does not qualify for another declaration-free exemption.
- Section 31-45(b) retains the declaration requirement under those facts.
- Exemption from the state transfer tax does not answer the filing question.
- The actual applicable exemption must be identified on the required record.
Answer: The stated tax exemption does not excuse the declaration.
Mistakes to avoid
- The state transfer tax is 0.50% of price. It is $0.50 per $500 or fraction. At exact $500 units that equals 0.1%, with the statutory unit rounding still required.
- Every local layer uses the state exemption and payer. Read the county statute and actual municipal ordinance. Do not extrapolate one city's rate or liability to every Illinois transaction.
- The seller's mortgage payoff always reduces transfer tax. The stated continuing subject-to condition is different from a payoff and release.
- Exempt transfer means no PTAX-203 in every case. Tax and declaration requirements are separate; apply the particular Section 31-45 clause.
- Revenue stamp always means a paper adhesive stamp in 2026. Section 31-15 phases out paper stamps after December 31, 2025 and calls for electronic revenue stamps or alternative indicia thereafter.
- A paper declaration form means paper revenue stamps are still the current rule. A form reports the transaction; a stamp or authorized indicia evidences payment. They are different parts of the process.
- A $6,000 example exemption is every county's current limit. Use the supplied qualifying amount for the exercise. Actual exemptions depend on the program, property, county and tax year.
- A closing credit pays the collector and also funds lender escrow. Trace the separate entries. A buyer credit alone is neither payment nor an escrow deposit.
- Every closing uses 105% of the prior bill or a 360-day year. Use the contract or exam assumptions. No universal factor, day convention or reproration term follows from these formulas.
Check your understanding
These are original teaching questions, not recalled or predicted PSI questions. Answer first, then explain why the other choices fail.
1. A nonexempt transfer has final taxable value of $300,001. What is the Illinois state transfer tax?
- $300.00
- $600.50
- $300.50
- $1,500.00
Show answer and explanation
Answer: C. $300.50
Divide by $500 and count the partial unit: 600.002 becomes 601 units. At $0.50 per unit, tax is $300.50. Ordinary nearest-unit rounding and a 0.50% formula do not apply.
2. State and county taxes apply to the same final $412,250 base at $0.50 and $0.25 per $500 or fraction. No municipal charge applies. What is their total?
- $412.50
- $618.75
- $618.38
- $824.50
Show answer and explanation
Answer: B. $618.75
Count 825 units. State tax is $412.50 and county tax is $206.25, totaling $618.75. Do not multiply by an unrounded unit count or invent a municipal layer.
3. A deed expressly leaves a $90,000 mortgage outstanding on a transfer with reported full consideration of $340,000 including that mortgage. No other adjustment applies. What is state tax?
- $170
- $90
- $340
- $250
Show answer and explanation
Answer: D. $250
The stated subject-to condition permits excluding the $90,000 under Section 31-10. The resulting $250,000 base contains 500 units, taxed at $0.50 each. This is not the same as paying and releasing the seller's loan.
4. The seller pays and releases a $90,000 mortgage from a $340,000 taxable sale. The buyer does not take subject to it. No other adjustment applies. What is state tax?
- $90
- $340
- $170
- $250
Show answer and explanation
Answer: B. $340
The ordinary payoff does not meet the stated subject-to condition. The supplied $340,000 taxable base contains 680 units, producing $340 state tax. The payoff affects seller proceeds, not that base.
5. A question supplies assessed value of $120,000, factor 0.95, qualifying EAV exemption of $6,000 and aggregate rate 8%. What is the simplified property tax?
- $9,600
- $108,000
- $2,880
- $8,640
Show answer and explanation
Answer: D. $8,640
First compute $114,000 EAV, then $108,000 taxable EAV and multiply by 0.08 to get $8,640. Assessed value is already given, so do not apply another assessment level. The exemption is a supplied assumption, not a statewide cap.
6. The buyer receives a $2,000 closing credit for the seller's accrued unpaid property taxes. What does that entry alone establish?
- The stated cost is allocated between the parties; the collector is not automatically paid
- The lender's escrow account has been funded
- The county has received $2,000
- The deed is transfer-tax exempt
Show answer and explanation
Answer: A. The stated cost is allocated between the parties; the collector is not automatically paid
A proration adjusts closing funds between buyer and seller. A tax payoff, payment to the collector and lender escrow are distinct actions. The credit alone does not prove any of them occurred.
7. A transfer qualifies under Section 31-45(b), with no stated exception or other declaration-free exemption. Which conclusion is correct?
- The buyer automatically receives a homestead exemption
- Tax exemption can coexist with a required transfer declaration
- All recurring property taxes disappear
- No declaration is ever required
Show answer and explanation
Answer: B. Tax exemption can coexist with a required transfer declaration
Section 31-45(b) preserves the declaration requirement subject to its stated exception. Exemption from one event-based tax does not erase parcel taxes or automatically create other relief.
8. What does the Illinois statutory stamp process provide after the December 31, 2025 paper-stamp phaseout?
- Every filer must buy an adhesive paper stamp
- Declarations and stamps become the same document
- Counties issue electronic revenue stamps or alternative indicia
- All transfers become tax-free
Show answer and explanation
Answer: C. Counties issue electronic revenue stamps or alternative indicia
Section 31-15 provides for electronic stamps or alternative indicia thereafter. A declaration reports the transfer and follows its applicable filing process. The phaseout does not change the $0.50 state rate or make every person use the same filing screen.
9. On a nonexempt $350,000 Chicago transfer with no liability-shifting exception, what are the City and CTA portions only?
- $3,675 each
- $2,625 City and $1,050 CTA
- $1,050 City and $2,625 CTA
- $350 and $175
Show answer and explanation
Answer: B. $2,625 City and $1,050 CTA
There are 700 units. City: 700 x $3.75 = $2,625; CTA: 700 x $1.50 = $1,050. Section 3-33-030 gives their stated incidence and exceptions. These are Chicago portions only, not a quote for all state/county taxes or closing expenses.
10. A parcel's taxable EAV is already $96,000 and the aggregate rate is $7.50 per $100. What should be done?
- Multiply $96,000 by0.075, giving $7,200
- Apply the assessment fraction again
- Deduct a guessed homestead exemption
- Use the transfer-tax $500-unit calculation
Show answer and explanation
Answer: A. Multiply $96,000 by0.075, giving $7,200
The rate is 7.5%, and taxable EAV already accounts for the stated value-chain stages. Multiplying by 0.075 gives $7,200. Do not substitute market value, reassess or subtract another unsupported exemption.
Common questions
What is the difference between transfer tax and property tax in Illinois?
Transfer tax concerns a specified taxable ownership transfer and its transfer-value base. Recurring property tax concerns the parcel's assessment and levy cycle and ordinarily uses taxable EAV. A closing can involve both, but one formula, exemption or payment entry does not automatically answer the other.
What are the Illinois state and county transfer-tax rates?
The state rate under Section 31-10 is $0.50 per $500 of taxable value or fraction. Section 5-1031 authorizes a county tax of $0.25 per $500 or fraction. Determine whether the county tax applies and check municipal charges separately. These are dollar amounts per unit, not 0.50% and 0.25% rates.
How do I round transfer-tax calculations?
For a supplied final taxable base, every fractional $500 unit counts as a full unit. PTAX-203 instructions separately require Lines 11 through 18 to be rounded to the next highest whole dollar. Follow the reporting sequence where those lines are being prepared, rather than silently substituting ordinary nearest-dollar rounding or rounding a net figure inconsistently.
Does the seller's mortgage reduce transfer tax?
Only apply the specified exclusion when the transferring document states that the property or covered interest is transferred subject to the mortgage remaining outstanding. A loan paid off and released from sale proceeds is different. A new buyer loan or the seller's other closing expenses do not automatically reduce the taxable base.
What does PTAX-203 include in consideration?
The instructions start with full actual consideration, with their stated treatment of repair or improvement credits/refunds, other real estate in a simultaneous exchange and outstanding mortgages to which the property remains subject. Personal-property and other adjustments have their own lines and conditions. Use documented facts; a bill-of-sale label or an arbitrary allocation is not a blanket deduction.
Can a transaction without a recorded deed still owe transfer tax?
Yes. Section 31-10 covers specified beneficial-interest and controlling-interest transfers and expressly reaches related transactions whether or not a document is recorded. Section 31-5 defines controlling interest as more than 50% of the fair market value of all ownership or beneficial interests in a real estate entity. The entity and interest definitions matter; not every change in any company is automatically taxable.
Are leases subject to this transfer tax?
Do not treat every ordinary lease or rent payment as a taxable transfer. Section 31-5 includes specified lessee interests in ground leases with 30 or more years counting renewal or extension options. IDOR distinguishes a transfer of such an interest from issuance or creation of a ground lease and says the tax does not apply to that issuance or creation. Apply the actual interest and transaction facts.
Do exempt transfers still need PTAX-203?
Some do. Section 31-45(b), for example, generally retains the declaration for covered governmental or charitable transfers, subject to its Veterans Affairs foreclosure exception. Sections 31-45(k) and(m) also contain filing qualifications. The under-$100 actual-consideration exemption has different treatment. If both (b) and (e) apply, the current instructions direct selection of (e), without a declaration or supplemental information, with the required exempt-status notation.
When is a required Illinois transfer declaration due?
Section 31-25 requires it when the transferring document is presented for recording or within three business days after the transfer is effected, whichever is earlier. The statute specifies seller and buyer signatures or their attorneys or agents; the current form also has preparer certification. Exemptions can alter filing requirements. This is not a general 30-day filing period.
Are Illinois revenue stamps still paper in October 2026?
Sections 31-5 and 31-15 provide for the paper-stamp phaseout by December 31, 2025, with electronic stamps or alternative indicia thereafter. Do not confuse a fill-in declaration with a paper revenue stamp. IDOR's current resources distinguish MyDec and forms for non-MyDec counties; the statutory stamp change does not mean every person follows one identical portal workflow.
Does MyDec pay the tax merely because I create a declaration?
Do not assume so. IDOR describes MyDec as a system for submitting and processing declarations, including the state forms and participating local declarations. A draft, submission or approval is not by itself proof that every required tax has been remitted. Follow the applicable county process and retain the actual payment evidence.
How much is Chicago's transfer tax?
Section 3-33-030 provides a City portion of $3.75 per $500 or fraction and a CTA portion of $1.50 per $500 or fraction. Under its ordinary stated allocation, the transferee bears the City portion and the transferor pays the CTA portion, with specified exemptions and liability-shifting provisions. These are Chicago charges, separate from state and county layers; do not use them for another municipality.
Can the contract change who pays a transfer tax?
It can allocate the economic cost between buyer and seller, subject to applicable law. That does not rewrite the taxing authority's statutory or ordinance rights. Chicago has express incidence rules, exceptions and a joint-liability provision for an unpaid CTA portion. On an exam, distinguish the governing liability rule from a stated reimbursement agreement.
Do state exemptions automatically apply to municipal transfer taxes?
No. Section 5-1031 expressly carries specified state exemptions into the county tax, but municipal exemptions require their own authority. For example, Chicago's ordinance has a transfer-price-less-than-$500 exemption, while the state provision refers to actual consideration less than $100. Other conditions and required exemption evidence still matter.
What is the ordinary Illinois property-tax formula?
Use the supplied assessment level and applicable equalization factor to reach EAV, subtract qualifying EAV exemptions, then multiply taxable EAV by the aggregate local rate. Start at the value stage the question actually gives. There is no single statewide aggregate rate or universal assessment level covering Cook classifications, farms and all other property.
Why are Illinois property taxes prorated at closing?
The ordinary cycle assesses property one year and bills it the following year. A buyer may therefore later pay a bill that includes the seller's ownership period. A contract proration allocates that period's estimated cost. Use its estimate, day convention, closing-day allocation and any reproration clause, rather than assuming 105% or 360 days by law.
Does a seller tax credit clear the property-tax lien?
Not by itself. Section 21-75 describes a prior and first property-tax lien from January 1 of the levy year, including the specified penalties, interest and costs, until the statutory resolution. A credit between parties does not prove payment to the collector. Outstanding bills, title treatment and any actual payoff must be checked separately.
Does a homestead exemption reduce transfer tax?
Not automatically. A qualifying homestead exemption reduces taxable EAV under its own program; it is not an automatic exemption of a later deed from transfer tax. Conversely, a transfer-tax exemption does not cancel recurring property taxes. Do not carry one exemption letter or example amount across the two systems.
Keep practising
Your next practice step
Put Illinois law into practice
Apply the relevant Illinois rule without carrying an exception into a different situation.
These web resources are free. The app has a separate free starter tier and optional paid full access.
Official sources and scope
Checked October 24, 2026 against relevant current Illinois statutes, IDOR instructions and the published Chicago Code. Official indexed Illinois text was used where direct retrieval failed. PTAX-203 instructions are revised October 2024; the property-system guide is January 2026. The statutory paper-stamp phaseout is distinguished from declaration preparation. Chicago rates and exceptions are local; an older county courtesy list is not treated as a current statewide municipal directory. All numeric examples are hypothetical with stated assumptions. This is not a completed transfer filing, individual exemption decision, settlement statement or federal-lien priority analysis.
- PSI Illinois booklet, June 24, 2026: state III.C and III.F
- 35 ILCS 200/31-5: transfer value, interests and revenue-stamp definitions
- 35 ILCS 200/31-10: state rate, scope and subject-to exclusion
- 35 ILCS 200/31-15: electronic stamps after paper phaseout
- 55 ILCS 5/5-1031: county tax and exemption links
- 35 ILCS 200/31-25: declaration timing and signatures
- 35 ILCS 200/31-45: transfer exemptions and filing qualifications
- IDOR PTAX-203 instructions, revised October 2024
- IDOR: MyDec, declaration resources and ground-lease distinction
- Chicago Municipal Code 3-33-030: City and CTA portions and liability
- Chicago Municipal Code 3-33-060: municipal exemptions
- IDOR PTAX-1004, January 2026: property-tax cycle and calculation
- IDOR: property-tax rates and assessment methods
- IDOR: closing responsibility, credits and contracts
- 35 ILCS 200/21-75: property-tax lien date
This is exam preparation, not advice for a specific transaction. State law and the applicable facts control. Our editorial and corrections process explains how to report an issue.