Can Illinoisans beat tax reduction cap?
By Cole Lauterbach
Illinois News Network
SPRINGFIELD — Federal tax reform has Illinoisans trying to get next year’s property tax bills paid in an effort to get around the possible cap on local deductions.
The tax reform bill caps federal deductions of state and local taxes, including property taxes, at $10,000. In high-tax states like Illinois, this means the sting of local property taxes isn’t soothed by a big federal write-off.
You are able to pre-pay your property taxes in some counties like Champaign and Sangamon, but not in McLean. Champaign County Treasurer Dan Welch said they’re welcoming the early birds.
“We’re seeing much more traffic this month,” he said. “For us, we’re happy to collect it since it’s less that we’ll have to collect later in the summer.”
In 2016, Welch said his office saw 283 people pay $3.1 million in early property tax payments. He’s sure it will be much more this year.
But Laurie P. Barry, wealth advisor with UBS Wealth Management, warns that the tax reform bill might not allow for early filing of taxes to get around that $10,000 cap.
“There is some language that suggests that prepayment of some of these taxes will not be eligible to deduct in 2017 if they’re for 2018,” she said.
Barry suggests that joint-filing taxpayers who have historically itemized deductions make sure they wouldn’t benefit from the new $24,000 standard deduction.
There are 1,256 homes that would have a property tax bill over $10,000 in all of Champaign County, according to Welch.
Champaign County has a minimum and maximum that their taxpayers can pay ahead, and it’s only available for the month of December before the tax year.
Illinoisans pay more in property taxes than nearly any other state. Experts say it actually depresses home values since a potential buyer will factor in the cost of the monthly tax bill into their payments and find market prices unaffordable, depressing final sale prices. R.