Do Veterans Pay Property Taxes in Illinois: Tiers and Savings

Many veterans in Illinois pay reduced property taxes, and some pay none at all. The state offers three property tax exemptions for veterans: the Homestead Exemption for Veterans with Disabilities, the Specially Adapted Housing Exemption, and the Returning Veterans’ Homestead Exemption. The largest can eliminate property taxes on up to $250,000 of equalized assessed value for veterans rated 70% disabled or higher by the VA.

Disability Homestead Exemption Tiers

This is the exemption most Illinois veterans with a VA disability rating will use. It reduces the equalized assessed value (EAV) of your primary residence, and the reduction scales with your disability percentage. For tax year 2023 and after:

30% to 49% disability: $2,500 reduction in EAV
50% to 69% disability: $5,000 reduction in EAV
70% or higher disability: the first $250,000 of EAV is completely exempt

If your home’s EAV is $250,000 or less and you have a 70% or higher rating, you pay zero property taxes on it. Any EAV above $250,000 remains taxable.¹

To qualify, you need a service-connected disability certified by the U.S. Department of Veterans Affairs at 30% or higher. You must be an Illinois resident, own and occupy the property as your principal residence on January 1 of the assessment year, and not have been dishonorably discharged.²

Beginning with tax year 2024, this exemption also covers World War II veterans living in Illinois, with reduction amounts set separately by statute.¹

Specially Adapted Housing Exemption

This one is narrower but can be more generous for veterans who qualify. It applies to homes purchased, built, or adapted using federal Specially Adapted Housing (SAH) funds under Title 38, Chapter 21 of the U.S. Code. If you received an SAH grant due to severe service-connected disabilities such as loss of use of both legs, both arms, or blindness combined with loss of a lower extremity, your home is exempt on up to $100,000 in assessed value.³

The exemption carries over if you sell your adapted home and buy a new one, provided the sale proceeds go toward the replacement property. Since the 2015 tax year, homes constructed or adapted by a charitable organization also qualify if you’ve been approved for SAH funds and the home meets VA design standards.³

You cannot claim this exemption and the disability homestead exemption in the same year. The statute prohibits doubling up on those two.³

Returning Veterans’ Homestead Exemption

This exemption helps veterans who recently came home from active duty in an armed conflict. It provides a $5,000 reduction in your home’s EAV for the tax year in which you return. Since 2010, the reduction also applies to the following tax year, giving you two years of relief.⁴

The qualifier is “armed conflict.” Simply returning from active duty isn’t enough. You must be an Illinois resident who served in the U.S. Armed Forces, Illinois National Guard, or U.S. Reserve Forces, and you must own and occupy the property as your principal residence.⁴

One timing detail: if you buy your home after January 1 of the year you return, you can apply the exemption to the next tax year instead. That’s a one-year shift, not an extension. You still get the exemption for two tax years total at most.

A disabled veteran returning from armed conflict can hold this exemption and the disability homestead exemption in the same year.

What Surviving Spouses Get

Illinois extends property tax relief to surviving spouses of disabled veterans, but remarriage ends eligibility across the board. If your spouse held the Homestead Exemption for Veterans with Disabilities before passing, you can keep receiving it on that home as long as you hold legal or beneficial title, permanently reside there, and don’t remarry. You can also transfer the exemption to a new primary residence if you sell the original home.¹

Two categories of surviving spouses qualify even if the veteran never held the exemption during their lifetime:

Veteran killed in the line of duty. Beginning with tax year 2015, the unmarried surviving spouse receives a full 100% EAV exemption on their primary residence.
Service-connected death with DIC benefits. Beginning with tax year 2023, an unmarried surviving spouse who receives Dependency and Indemnity Compensation from the VA qualifies for the exemption even if the veteran hadn’t obtained it before death.

If your spouse’s death was service-connected, contact your county assessment office about eligibility even if no exemption was previously in place.²

For the Specially Adapted Housing exemption, the benefit extends to the spouse or unmarried surviving spouse for as long as they reside in the adapted home.³

How to Apply

All three veteran exemptions require an annual filing with your local Chief County Assessment Office. Apply once, and you still have to renew every year to keep the benefit.⁵

The forms depend on the exemption:

Homestead Exemption for Veterans with Disabilities: File Form PTAX-342 for initial applications, and Form PTAX-343-R each subsequent year to verify continued eligibility.
Specially Adapted Housing Exemption: Annual certification from the Illinois Department of Veterans’ Affairs is required.
Returning Veterans’ Homestead Exemption: File Form PTAX-327 for each eligible tax year.

Have your documentation ready: proof of Illinois residency, your DD-214 or equivalent discharge paperwork showing you were not dishonorably discharged, and your VA disability rating letter for the disability-based exemptions. The rating must be current as of the date you submit the application.²

Filing methods vary by county. Some counties require online submission through an e-filing portal; others accept paper applications in person or by mail. Contact your county assessment office for their process and deadlines.

What the Exemption Actually Saves You

Each exemption reduces your home’s EAV before the tax rate is applied. Your county then multiplies the remaining EAV by the local tax rate to calculate what you owe. So a $5,000 EAV reduction doesn’t save you $5,000 in taxes. In a district with a combined tax rate of 8%, a $5,000 reduction saves $400 per year. At a 12% rate, the same reduction saves $600.

The 70%-or-higher tier is where the math changes. With up to $250,000 of EAV wiped out entirely, most qualifying veterans in that bracket pay nothing or close to nothing. In parts of Illinois where home values are more modest, this effectively eliminates the property tax bill.¹

1
Illinois General Assembly. Illinois Compiled Statutes 35 ILCS 200/15-169 – Homestead Exemption for Veterans with Disabilities
2
Illinois Department of Revenue. Property Tax – Exemption Information (PIO-74)
3
Illinois General Assembly. Illinois Compiled Statutes 35 ILCS 200/15-165 – Veterans with Disabilities
4
Illinois General Assembly. Illinois Compiled Statutes 35 ILCS 200/15-167 – Returning Veterans Homestead Exemption
5
Illinois Department of Revenue. Property Tax Relief Information for Veterans and Persons with Disabilities