Do Veterans Pay Property Taxes in Illinois: Disability Exemptions

Veterans in Illinois do pay property taxes, but three exemptions can shrink the bill or wipe it out entirely. The largest, the Homestead Exemption for Veterans with Disabilities, removes the first $250,000 of equalized assessed value from taxation for veterans rated at 70% service-connected disability or higher. A second program covers homes bought or adapted with federal Specially Adapted Housing funds, and a third gives a two-year break to veterans returning from armed conflict. Surviving spouses can keep the benefit as long as they don’t remarry.

Homestead Exemption for Veterans With Disabilities

This is the exemption most Illinois veterans with a VA rating will use. It reduces your home’s equalized assessed value (EAV) each year, 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 fully exempt

If your home’s EAV is $250,000 or less and your rating is 70% or higher, you pay nothing in property taxes on it. Any EAV above that line is still taxable.¹

To qualify, you need a VA-certified service-connected disability of at least 30%. 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 Starting with tax year 2024, the exemption also covers World War II veterans living in Illinois, with reduction amounts set separately in the statute.¹

Specially Adapted Housing Exemption

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

If you sell the adapted home and buy another, the exemption carries over, as long as the sale proceeds go toward the replacement property. Since the 2015 tax year, homes built or adapted by a charitable organization also qualify, provided you’ve been approved for SAH funds and the home meets VA design standards.³

This exemption must be reestablished every year through certification from the Illinois Department of Veterans’ Affairs.² You cannot claim it in the same year as the disability homestead exemption; the statute prohibits stacking those two.³

Returning Veterans’ Homestead Exemption

Veterans recently home from active duty in an armed conflict get a $5,000 reduction in their home’s EAV for the tax year they return. Since 2010, the reduction also applies to the following tax year, so the total benefit runs two years.⁴

The qualifier that trips people up is “armed conflict.” Simply coming back from active duty is not enough; the deployment must have been to an armed conflict. You also need to be an Illinois resident who served in the U.S. Armed Forces, Illinois National Guard, or U.S. Reserve Forces, and the property must be your principal residence.⁴

If you buy the home after January 1 of the year you return, the exemption can apply to the next tax year instead. That shifts the window; it doesn’t lengthen it. Two tax years is still the maximum.

Surviving Spouses

If your spouse already held the Homestead Exemption for Veterans with Disabilities, you can keep receiving it on the same home as long as you hold legal or beneficial title, live there as your permanent residence, and don’t remarry. You can also transfer the exemption to a new primary home if you sell the original.¹

Two additional categories of surviving spouses qualify even if the veteran never held the exemption:

Veteran killed in the line of duty. Starting with tax year 2015, the unmarried surviving spouse receives a full 100% EAV exemption on the primary residence.
Service-connected death with DIC benefits. Starting with tax year 2023, an unmarried surviving spouse receiving Dependency and Indemnity Compensation from the VA qualifies even if the veteran had not obtained the exemption 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 live in the adapted home.³ Remarriage ends eligibility in every case.

How to Apply

All three veteran exemptions require an annual filing with your local Chief County Assessment Office. There is no file-once-and-forget option.⁵

Forms by exemption:

Homestead Exemption for Veterans with Disabilities: Form PTAX-342 for the initial application, Form PTAX-343-R each year after to verify continued eligibility.
Specially Adapted Housing Exemption: annual certification from the Illinois Department of Veterans’ Affairs.
Returning Veterans’ Homestead Exemption: Form PTAX-327 for each eligible tax year.

Have your documentation ready before you start: 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 application date.² Some counties now use an e-filing portal; others accept paper applications in person or by mail. Deadlines follow the local assessment cycle, so check with your county.

If Your Application Is Denied

A denial is not the end. The county Board of Review hears disputes about property tax exemptions, and the Board must give you a chance to be heard. If you disagree with the Board’s decision on a homestead exemption, you can appeal to the Property Tax Appeal Board within 30 days, and you don’t have to pay the disputed tax bill first.⁶ Most denials come down to missing documentation, a rating below the minimum, or not establishing the property as your principal residence on January 1. If the denial letter points to one of those, fix it and refile rather than filing an appeal.

What the Exemption Is Actually Worth

Each exemption reduces EAV before the local tax rate is applied. A $5,000 EAV reduction is not $5,000 off your bill. In a district with a combined rate of 8%, that reduction saves $400 a year; at 12%, it saves $600. The 70%-and-up tier is the outlier: with up to $250,000 of EAV removed, most qualifying veterans in that bracket pay little or nothing, and in parts of Illinois with modest home values the property tax bill disappears entirely.¹

You can hold more than one of these exemptions in the same year if you meet the criteria for each. A disabled veteran returning from armed conflict could claim both the disability homestead exemption and the returning veterans’ exemption. The one combination the statute blocks is the Specially Adapted Housing exemption together with the disability homestead exemption.³

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
6
Illinois General Assembly. Illinois Compiled Statutes 35 ILCS 200/16-70 – Determination of Exemptions