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SB 3540

PROP TX-ASSESSMENT LIMIT

104th Regular Session Introduced by Darby Hills and 2 co-sponsors

Imposes a CPI-based cap on annual residential assessed value increases starting 2026, with exceptions for improvements and sales, limiting home rule taxing power.

Added as Co-Sponsor Sen. Dave Syverson
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WeVote Research Nonpartisan
Bill Summary · SB 3540

SB3540 (104th General Assembly, Illinois) – PROP TX-ASSESSMENT LIMIT

Purpose and intent

  • Establishes a cap on the annual assessed value (AV) increase for residential property in general assessment years, aiming to limit property tax growth tied to the Consumer Price Index (CPI).
  • Seeks to limit local government taxing power by preempting home rule authority to tax beyond the cap.
  • Effective immediately upon enactment.

Key provisions and changes

  • Section amended: 35 ILCS 200/9-145 (Statutory level of assessment)

  • General assessment year AV cap for residential property (new subsection, effective 2026):

    • The assessed value of residential property in any general assessment year shall not exceed:
    • The AV of the property in the last general assessment year multiplied by
    • (1 + the percentage change in the Consumer Price Index) for the 12-month calendar year immediately preceding the general assessment year in which the reassessment is conducted.
    • Practical effect: AV cannot rise faster than the annual CPI increase for the prior year, for residential properties.

  • Exceptions to the cap:

    • The cap does not apply if the increase in assessment is attributable to:
    • An addition, improvement, or modification to the property (capital improvements).
    • The property is sold (transfer triggers potential reassessment outside cap).

  • CPI definition (for the cap):

    • Uses the CPI published by the U.S. Bureau of Labor Statistics, U.S. city average, all items, 1982-84 = 100.

  • Constitutional and local government implications:

    • The cap represents a denial and limitation under Article VII, Section 6(g) of the Illinois Constitution on the power of home rule units to tax.
    • The measure explicitly preempts home rule taxing authority to exceed this cap for residential AV increases.

  • Other details:

    • The cap applies beginning with the 2026 assessment year (i.e., first year of implementation is 2026).
    • The bill retains existing valuation rules for other properties (e.g., class-wide 33 1/3% standards for various property types remain intact as baseline assessments, outside the new cap for residential AV).

Who would be affected

  • Residential property owners:

    • Potentially protected from sharp AV increases year over year, subject to CPI-based cap, additions/improvements, or sale exceptions.

  • Local governments and taxing bodies:

    • Affected through limited AV growth for residential properties, which could constrain property tax levy authority and revenue growth.
    • Preemption of home rule taxing authority regarding residential property taxes.

  • Property developers and owners planning capital improvements:

    • Improvements may trigger removal from the cap, leading to higher AV (and possibly taxes) if improvements are undertaken.

Procedural and timeline aspects

  • Introduction and sponsorship:

    • Introduced February 5, 2026 by Sen. Chapin Rose.
    • Co-sponsors: Sen. Darby Hills and Sen. Chapin Rose.

  • Effective date:

    • Takes effect immediately upon becoming law.

  • Legislative route:

    • Referred to assignments; subsequently subject to committee action, amendments, and floor consideration per standard Illinois legislative process.

Practical considerations and potential impacts

  • Stabilization of residential tax bills:

    • The CPI-based cap could reduce volatility in residential AV adjustments, offering predictability for homeowners.

  • CPI volatility risk:

    • If CPI rises sharply, AV could still increase substantially, though capped relative to the prior year’s AV.

  • Build and improvement incentives:

    • Homeowners planning improvements might weigh tax consequences, as improvements can bypass the cap.

  • Equity considerations:

    • The cap targets residential properties; other property classes retain standard assessments, potentially widening relative tax burden across classes.

This summary captures the bill’s core aim: to limit residential AV growth annually using CPI as a cap while allowing exceptions for improvements and sales, with immediate preemption of home rule taxing power and an effective start in 2026.

Compiled from official sources — confirm details with the bill’s official record.

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