Why Kane County officials could push for wealthier people over age 65 to get tax break
More than 77,000 Kane County residents meet at least the senior age requirements to take advantage of an exemption that would lower their property taxes. But recent, considerable increases to Social Security benefits might make some fixed-income households too rich to take advantage of the program -- unless county board members succeed in a push to address the issue.
The cost of living adjustment to Social Security benefits in 2021 was 5.9%. An 8.7% increase followed in 2022. That increase in Social Security income exceeded any spike since 1980 and 1981, when benefits jumped by more than 25%. In Illinois, some of that money may be gobbled up through higher property tax bills caused by a loss of eligibility for the low-income senior citizen assessment freeze homestead exemption.
To qualify, a recipient must be at least 65 years old on Jan. 1 of the applicable tax year. And total household income (including Social Security benefits) can't exceed $65,000. If a senior meets those requirements, the assessed value of their property can be frozen at its current value. That helps keep their property taxes from going up merely because the assessed value of their property increases.
State lawmakers set the household income cap for the benefit at $65,000 in 2018. That was a $10,000 jump from the cap that was in place for the preceding decade.
County board member Vern Tepe said in an interview it is time to raise that cap to $75,000. Tepe lives in a Del Webb retirement community. And he's a registered tax preparer.
"My experience is with seniors," Tepe said. "Most of the ones I know are widows. They are living on Social Security and some small form of a pension. This exemption is really important to them. We would have a real challenge if more and more people were unable to stay in their homes, particularly the elderly. We just don't have the resources to take care of them."
Tepe wants to lobby his local state lawmakers to raise the income cap. But not everyone on the county board, including some of his fellow Democrats, are enthusiastic supporters of the plan.
County board Chair Corinne Pierog reminded board members during a recent committee meeting that any move that gives more seniors a property tax exemption also increases property taxes on everyone else in the county.
Taxing bodies like schools and city councils set the amount of taxes to be collected. Property assessments just decide how much of the burden an individual taxpayer shoulders.
"That money that is not being collected (from the exempt seniors) gets disbursed to those people who are not frozen," Pierog said. "Because the money remains the same that needs to be collected. Everyone else picks up that slack, and the amount everyone else will have to pay will increase. The single, working mom, she will have to pay more."
That slack that the rest of the taxpayers pick up so the exempt seniors can see relief amounts to about a 1% property tax hike. For example, for someone with a property tax bill of $5,000, $50 of that bill is because they are subsidizing the amount the exempt seniors aren't paying. It's $100 of a $10,000 property tax bill.
In contrast, the median savings for households who received the senior exemption in 2021 was $1,573, according to Mark Armstong, Kane County's supervisor of assessments. In 2021, 8,762 households received the exemption. That was the second-greatest number of exemptions ever granted in Kane County. The largest, 9,237, was in 2020.
If history is an indicator, Kane County would likely see a record number of senior exemptions if state legislators raise the household income cap. Senior freeze reductions rose 10.75% increased the cap in 2006. They rose 6.23% following the 2008 cap increase. And they rose 17.56% following the most recent cap increase in 2018.
There's also a question about how low income a household is, even a senior, fixed-income household, if total taxable earnings are $75,000 -- the cap Tepe wants to see put in place. The most recent Census puts the median income of all Kane County residents at $89,000.
Tepe said he based his push for a $75,000 cap on the $10,000 increase in 2018. So far, he has the support of the county board's legislative committee. Tepe said he isn't looking for any change to go into effect until 2024, but it's a change he will push for.
"Whenever you're hit with inflation or increased costs, it's the poor that get the major brunt of it," Tepe said. "A few thousand dollars makes a tremendous difference."