Tax Levy Frequently Asked Questions
Tax Levy Frequently Asked Questions
Understanding concepts like a school tax levy and tax extension can be challenging, as they involve technical terms and complex calculations. Defining and illustrating these ideas helps build a better understanding of how property taxes fund schools.
Did you know?
A property tax levy is the amount of property tax dollars a school district requests to educate the community’s children for the upcoming school years.
Essential Definitions:
- Tax Levy: The revenue requested by a public taxing body.
- Tax Extension: The actual revenue received by the taxing body.
- PTELL (Property Tax Extension Limitation Law or “Tax Cap”): Limitation on the District’s actual revenue received (or extended) at the lessor of 5% or prior year consumer price index (CPI). The CPI that applies to the 2023 tax levy is 5 percent, and 3.4 percent in 2024.
- CPI: Consumer Price Index is a measure of the average change over time in the prices paid by consumers for goods and services, determined by the U.S. Bureau of Labor Statistics.
- EAV: Equalized Assessed Valuation, which is approximately one-third of the property market value.
- Tax Rate: Percentage applied to EAV to calculate the tax extension.
How are property taxes calculated?
The basic formula takes EAV (including any new property growth in the district) and multiplies it by the tax rate. This equals the tax extension.
This formula is difficult for taxing bodies to calculate precisely because two of the variables, the EAV and the tax rates, are not available before the tax levy is due to be submitted to the County Clerk’s office. Each year we make an educated guess to ensure we gather enough revenue to provide for the educational needs of our students.
Why would the District request an increase over the prior year?
SHSD161 requested 4.99 percent over the prior year because we are anticipating new property (additions to the EAV) to enter the tax rolls that we want to capture. The actual new growth figures and property values will not be available until late spring of 2025, but our levy was due by the end of December 2024. To meet the December deadline, we must make an educated guess regarding our overall tax extension.
What happens if SHSD161 doesn’t levy enough?
If we miss the revenue target, we would be unable to receive the full amount of property tax we need to continue the programs and services essential to a high-quality school system. Since each year’s levy is calculated on the prior year’s extension, this mistake would be compounded each future year.
*The 2024 projected tax rate is $3.788.
For more information on how the State of Illinois calculates property taxes, this video may be helpful.