Illinois has raised the income ceiling for its property tax deferral program for older homeowners, and for tax year 2026 the limit is $77,000 in household income. Eligible homeowners who are 65 or older can put off as much as $7,500 a year in property taxes, or 80 percent of the home’s equity, whichever is less. The Illinois Department of Revenue announced the change on December 16, 2025, after what it called recent changes to state law.
The old limit was $65,000. The new schedule runs $75,000 for tax year 2025, $77,000 for tax year 2026 and $79,000 for tax year 2027 and every year after, which pulls in homeowners with moderate retirement incomes who were turned away before.
Does this apply to a given household? The state’s bulletin sets four tests: the homeowner must be 65 or older by June 1 of the filing year, household income must be at or under the limit for that tax year, the home must be the primary residence, and the owner must have owned and lived in it for at least three years. There also can be no unpaid property taxes or assessments on the property, and fire or casualty insurance must be kept up.
What changed this year: Social Security and Medicare change every year, and nobody sends you a memo. The Retirement Money Brief breaks down what changed and what to do.
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What the $7,500 and the 80 percent mean
The Department of Revenue’s wording is that eligible seniors may defer “up to $7,500 per year, or 80% of their home’s equity, whichever is less.” Two ceilings apply at once. A homeowner with a $5,000 bill and plenty of equity can defer the whole bill, while one with a $9,000 bill can defer only $7,500 of it.
Equity is the home’s value minus what is still owed on it. A homeowner with little equity could therefore be held to a lower figure than $7,500, because the 80 percent cap would bind first. The bulletin gives no example, so the arithmetic is the only guide to how the two limits interact.
How income is measured for 2026
The limit is a maximum household income, not an individual income. For tax year 2026 the line is $77,000, so a household at $77,000 is inside and one at $77,001 is not. That is a difference of $12,000 from the old $65,000 cap, and $2,000 more than the $75,000 allowed for tax year 2025.
The step up continues. From tax year 2027 forward the limit is $79,000, which means a household that sits just above the line this year may qualify next year without any change in its finances.
A deferral postpones the bill, it does not erase it
Deferral means the county collector holds off collecting the taxes that would otherwise be due, rather than cancelling them. The state’s bulletin does not describe how or when deferred taxes are repaid, and it does not state an interest rate. Anyone considering the program should ask those questions of the county before signing up, because the answers decide what the deferral costs over time.
That matters most to homeowners who plan to leave the house to heirs or sell it within a few years. It matters less to a homeowner whose goal is simply to get through a tight stretch while staying put.
Where to apply and what the deadline is
The Department of Revenue says the way to apply is to contact the local county collector’s office, and it points to tax.illinois.gov for more information. The only deadline in the bulletin is for tax year 2025, when applications were due March 1, 2026.
The bulletin gives no matching date for tax year 2026. A homeowner who wants the $77,000 limit applied to 2026 should ask the county collector for the filing date that applies, since the state has not published one in this announcement.
Does the deferral fit a household at $77,000?
The detail that trips up older homeowners is that qualifying for one break says nothing about the others. A household that is a few hundred dollars over $77,000 can still sit inside a different program’s limit, and the Illinois bulletin says nothing about the rest.
The Senior Property Tax & Home-Cost Relief Kit sorts the 5 kinds of property-tax relief by what each one does, and its Part 3 walks through the senior programs one at a time. It also includes an application log and renewal calendar, so each county filing has a date and a status beside it.
Compare the 5 kinds of property-tax relief in The Senior Property Tax & Home-Cost Relief Kit →
More Financial Reading
- 21 Ways to Stretch a $2,087 Social Security Check
- 15 Places to Find Your Share of the $4.25 Billion States Give Back
- 21 Ways Retirees Can Raise $1,000 Fast Without a Job
This article was produced with AI assistance and edited for accuracy against the sources linked above.
