One of the biggest numbers on your closing statement, and the one clients ask me about most, isn’t the price of the house. It’s the real estate tax credit. If you’re selling, it can feel like a big chunk of your proceeds. If you’re buying, it can look like a strange line item you didn’t expect. Either way, in Illinois it’s rarely small, so it’s worth understanding before you sit down at the closing table.
Illinois Taxes Are Paid a Year Behind
Here’s the piece that trips people up: Illinois collects real estate taxes in arrears. The tax bill you pay in 2026 covers 2025 — the year you actually lived in or owned the home. So when you sell partway through a year, you’ve used the property for months that haven’t been billed yet, and the county won’t send that bill to the new owner until sometime next year (usually in May).
Since the buyer will eventually get stuck paying a full year’s tax bill that covers time the seller actually owned the home, the seller has to hand over a credit at closing for their share of that unpaid bill. That’s the tax proration.
How much is the credit? There’s no fixed number here — it’s whatever the buyer and seller agree to in the contract, usually as a percentage of the most recent known tax bill. In my experience, most contracts land somewhere between 105% and 110%.
Why not just use 100%? Because property taxes in Illinois almost never go down. Bumping the number up protects the buyer from getting a lowball credit based on last year’s bill and then getting hit with a much bigger one the following year. It’s not a penalty on the seller — it’s a reasonably safe bet that the county will raise the bill again, and everyone would rather account for that now than fight about it later.
Once the contract tells me the percentage, and I know the closing date, the math is simple.
A Real-World Example
Say you’re closing on June 15 — the 166th day of the year — and the most recent tax bill was $8,400, with the contract calling for a 110% credit.
Take the tax bill and apply the percentage: $8,400 × 1.10 = $9,240. Divide that by 365 to get a daily rate: about $25.32 per day. Multiply that by the 166 days the seller owned the home this year, and you get a tax credit of roughly $4,203, paid by the seller to the buyer at closing.
That’s the formula in every closing I handle — only the tax bill, the percentage, and the closing date change.
A few things to keep in mind. The proration is only as accurate as the tax bill it’s based on, so a few things are worth double-checking before closing. If the seller has a homeowner, senior, or senior freeze exemption on the property, that exemption typically won’t transfer to the buyer, and the buyer’s actual future bill could end up higher than the seller’s did. If the property was recently reassessed, or if there’s a pending appeal, the “last known bill” you’re prorating off of may not reflect where the number is headed. None of this changes how the proration is calculated — it just affects whether the estimate turns out to be generous or tight, which is exactly why the 5–10% cushion exists.
A tax proration is only as good as the information behind it — the right tax bill, the right percentage, and the right closing date. Getting it wrong by even a few points can mean thousands of dollars going to the wrong party. That’s the kind of thing I check on every transaction I handle.
If you have questions about your upcoming closing, contact us — we’re here to help.
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