Illinois

Illinois law requires most real property to be assessed at 33% percent of fair cash value. The assessment of farmland is an exception to the general 33% percent assessment rule.

Property Classification:

For classification purposes "forest land" falls under the general heading of farmland.

Farmland

A parcel of land used for agricultural purposes for two years is eligible for assessment as a farm (Property Tax Code, Sec. 10-110 [35 ILCS 200/10-110]).

Farm is defined as any tract of land used for one or more of the following uses:

1. for the growing and harvesting of crops;

2. for the feeding, breeding and management of livestock;

3. for dairying; or

4. for any other agricultural or horticultural use or combination thereof; including, but not limited to, hay, grain, fruit, truck or vegetable crops; floriculture, mushroom growing, plant or tree nurseries, orchards, forestry, sod farming and greenhouses; the keeping, raising, and feeding of livestock or poultry, including dairying, poultry, swine, sheep, beef cattle, ponies or horses, fur farming, bees, fish and wildlife farming (Property Tax Code, Sec. 1-60 [35 ILCS 200/1-60])

A farm does not include property that is primarily used as a residence even though some farm products are produced on the property incidental to its primary use. Farmland subject to the ongoing removal of oil, gas, coal, or any other mineral will not lose its status as farmland.

Valuation and Assessment:

The value of farmland for assessment purposes is based on the productivity of the soil (Property Tax Code, Sec. 10-115 [35 ILCS 200/10-115]). Each soil type in the state is rated by the University of Illinois College of Agricultural, Consumers, and Environmental Sciences according to its capability of producing crops. This rating is known as the "soil productivity index."

For each of these soil ratings, there is calculated a five-year average net income, derived by taking the average gross income per acre less the average production costs per acre. The net income for each soil productivity index is then divided by the five-year moving average of the Federal Land Bank farmland mortgage interest rate to yield the soil's "agricultural economic value per acre."

The "equalized assessed value" per acre of farmland for that soil productivity index is 33 ^1/3 % of its agricultural economic value. Any increase or decrease in the equalized assessed value cannot exceed 10% of the preceding year's value.

Assessment level by type of farmland. (35 ILCS 200/10-125)

Farmland is further broken down into four classes for assessment purposes:

1. Cropland - which shall be assessed in accordance with the equalized assessed value of its soil productivity index as certified by the Department and shall be debased to consider factors including, but not limited to, slope, drainage, ponding, flooding, and field size and shape.

2. Permanent pasture - which shall be assessed at ^1/3 of its debased productivity index equalized assessed value as cropland.

3. Other farmland - which is neither cropland nor pasture shall be assessed at ^1/6 the "equalized assessed value" as cropland.

4. Wasteland - which shall be assessed on its contributory value to the farmland parcel.

(In no case shall the equalized assessed value of permanent pasture be below ^1/3, nor the equalized assessed value of other farmland, except wasteland, be below ^1/6, of the equalized assessed value per acre of cropland of the lowest productivity index certified under Section 10-115.

Preferential assessments for wooded land:

· Property under forestry management plan (35 ILCS 200/10-150)

In counties with less than 3,000,000 inhabitants, any land being managed under a forestry management plan accepted by the Department of Natural Resources under the Illinois Forestry Development Act shall be considered as "other farmland" and shall be valued at ^1/6 of its productivity index equalized assessed value as cropland.

In counties with more than 3,000,000 inhabitants, any land totaling 15 acres or less for which an approved forestry management plan was in effect on or before December 31, 1985, shall be considered "other farmland". The Department of Natural Resources shall inform the Department of Revenue and each chief county assessment officer of each parcel of land covered by an approved forestry management plan.

Basic Formula:

Tax Liability = 1/6 x (agricultural economic value x 33 ^1/3 %)

Conservation Stewardship (35 ILCS 200/10-400 et seq.)

In all counties, except for Cook County, beginning with assessments made in 2008 and thereafter, managed land for which an application has been approved under the Conservation Stewardship (35 ILCS 200/10-415) that contains 5 or more contiguous acres is valued at 5% of its fair cash value.

To apply for the special valuation, a landowner requesting special valuation of unimproved land under the Conservation Stewardship Law shall first submit a conservation management plan to the Department of Natural Resources (IDNR) for review. Upon approval, the IDNR certify to the DOR a list of applications approved under the section. The DOR shall notify the chief county assessment officers of each parcel of land covered by an approved conservation management plan and application. The county assessor shall determine the values of land as otherwise permitted by law.

The IDNR shall withdraw all or a portion of the land from the special valuation when any of the following events occur:

1) The IDNR, based on field inspection or from any other reasonable evidence, that the land no longer meets the criteria; or

2) The failure of the taxpayer to respond to a request from the IDNR or the chief assessor regarding the use of the land pertinent to the continued special valuation of the land.

If, in any tax year that the taxpayer receives a special valuation under this special valuation, the taxpayer does not comply with the conservation management plan, then the taxpayer shall pay to the county treasurer the difference between: (i) the taxes paid for that year and; (ii) what the taxes for that year would have been based on a valuation otherwise permitted by law.

Transition Percentage Assessment (TPA)

The wooded land under the Transition Percentage Assessment is assessed at a percentage (transition percentage) of its fair cash value. The transition percentage of a property is the property's 2006 equalized assessed value (EAV) as farmland divided by the property's 2006 fair cash value.

To qualify for the assessment, the property must be:

1) unimproved real property assessed under the Farmland Assessment Law in 2006, but not in a qualified farm use;

2) wooded acreage;

3) a minimum of 5 contiguous acres;

4) owned by the current owner before October 1, 2007; and

5) not assessed under the Forestry Management Act or any other preferential assessment.

Qualifying properties will receive the special valuation automatically.

The TPA is removed when any of the following occur:

1) property is transferred;

2) property no longer meets the qualification listed above;

3) percentage ownership of a LLC, corporation, trust, etc., changes more than 50%.

Land enrolled in conservation programs

Land enrolled in certain conservation programs may qualify for preferential assessment depending upon the program in which the property is enrolled.

• Land in Conservation Reserve Program (CRP)

Land in the CRP is eligible for a farmland assessment provided it has been in the CRP or another qualified farm use for the previous two years and is not a part of a primarily residential parcel. When tree maturity prevents the land from being cropped again, the "other farmland" assessment should apply.

• Land in Conservation Reserve Enhancement Program (CREP)

Land in the CREP is eligible for a farmland assessment provided it has been in the CREP or another qualified farm use for the previous two years and is not a part of a primarily residential parcel. Land in CREP is assessed the same as CRP.

• Non-clear cut assessment

Qualifying land must be located within 15 yards of navigable water and cannot be located in a unit of local government with a population of more than 500,000. If such land has not been clear-cut of trees it is to be valued at one-twelfth of its productivity index equalized assessed value as cropland.

• Registered land or land encumbered by conservation rights

Special assessment treatment is available for land that is either registered in perpetuity under the Illinois Natural Areas Preservation Act or encumbered in perpetuity by a conservation right under the Real Property Conservation Rights Act. In counties other than those with a population of more than 200,000 that classify property for taxation, the land is assessed at 8 ^1/3 % of its fair market value if not registered or encumbered (ie. at 25 percent of the statutory 33 ^1/3 %). In counties that classify property, the assessment is at 25 percent of the ordinance level for that class of property.

Special Circumstances: Vegetative filter strips

Effective January 1, 1997, through December 31, 2026, land located between a farm field and an area to be protected, including surface water, streams, rivers, or sinkholes, is considered a vegetative filter strip. The land must be at least 66 feet in width and contain vegetation that has a dense top growth, forms a uniform ground cover, has a heavy fibrous root system, and tolerates pesticides used in the farm field (Property Tax Code, Sec. 10-152 [35 ILCS 200/10-152]).

In counties with fewer than 3 million inhabitants, vegetative filter strips will be valued at one-sixth of their productivity index "equalized assessed value" as cropland (Property Tax Code, Sec. 10-152 [35 ILCS 200/10-152]). In counties with 3 million or more inhabitants, the land will be valued at the lesser of (1) 16% of the fair cash value of the farmland estimated at the price it would bring at a fair, voluntary sale for use by the buyer as a farm, or (2) 90% of the 1983 average equalized assessed value per acre certified by the Department of Revenue.

When a timber buyer purchases timber the buyer must determine the amount to be paid for such timber, or the value of items to be bartered for such timber, and must deduct from the payment to the timber grower an amount which equals 4 percent of the purchase price and shall forward such amount to the Department of Natural Resources, along with a report of the purchase on forms provided by the Department. (225 ILCS 735/9a)

Every timber grower who utilizes timber produced on land he owns or operates for sawing into lumber, for processing, or for resale, except a person who occasionally uses his own timber for sawing or processing for his own use and not for resale, shall report periodically, as required by regulation of the Department, the quantity of timber produced and utilized by the owner or operator during the reporting period. Such timber grower shall pay to the Department, when the periodic report is submitted, an amount equal to 4 percent of the gross value of the timber utilized during the period. Penalty applies in the case of a failure to pay the harvest fee.

The fees shall be deposited in the Illinois Forestry Development Fund.

• Illinois Department of Revenue. 2019. Preferential assessments for wooded acreage. Publication 135.

• Illinois Department of Revenue. The Illinois property tax system – A general guide to the local property tax cycle.

• Illinois Department of Natural Resources. Timber buyer information. https://www.dnr.illinois.gov/LPR/Pages/TimberBuyerInformation.aspx