Illinois Senior Tax Deferral Program: Eligibility, Deadline, Interest

The Illinois Senior Citizens Real Estate Tax Deferral Program lets qualifying homeowners aged 65 and older postpone their property tax bill. To meet the Illinois senior tax deferral program requirements, you must be at least 65, have owned and lived in your home for three consecutive years, keep household income under a set cap ($77,000 for the 2026 tax year), and file the paperwork with your county collector by March 1. The state pays the bill and gets its money back, plus 3% simple interest, when the home is sold or transferred. The most you can defer in a single year is $7,500.¹

Who Qualifies

You need to be 65 or older by June 1 of the year you apply. Household income, which counts taxable and non-taxable income for everyone living in the home, cannot exceed the statutory cap. That cap rises on a set schedule: $75,000 for 2025, $77,000 for 2026, and $79,000 for 2027 and beyond.¹

Residency is the other threshold. You need at least three consecutive years of owning and occupying the property as your residence. If you moved recently, you can still qualify as long as you owned and lived in another qualifying Illinois property for that same three-year stretch. Time spent temporarily in a nursing home or sheltered care facility does not break the residency clock.²

Which Properties Qualify

The home must be your principal residence and classified as a homestead. Properties held for commercial or rental purposes where the owner does not live are out. Any property taxes from prior years must be paid in full before you can enter the program, and you have to carry fire and casualty insurance covering at least the total amount of taxes that have been deferred.³

Two ceilings limit how much you can push into deferral. One is the annual cap of $7,500. The other is cumulative: all deferred taxes, interest, and lien recording fees combined cannot exceed 80% of your equity in the property.¹ Hit either one and the program stops covering additional taxes until the balance drops. If you have been deferring for years and your home’s value hasn’t climbed much, the 80% equity cap can arrive sooner than you’d expect.

How Mortgages and Reverse Mortgages Factor In

You do not need written approval from your lender to participate, even if you carry a mortgage or reverse mortgage. You should still notify your lender before applying and confirm that joining the program won’t violate anything in your loan agreement. Reverse mortgage holders should pay particular attention, because some reverse mortgage contracts restrict additional liens on the property.⁴

Forms, Documents, and the March 1 Deadline

Two forms go to your county collector’s office. Form IL-1017 is the Application for Deferral of Real Estate/Special Assessment Taxes. Form IL-1018 is the Real Estate/Special Assessment Tax Deferral and Recovery Agreement, which establishes the state’s right to repayment.¹ Both become available at the county collector’s office after January 1 each year.

Plan to bring:

Your property index number, found on a previous tax bill or assessment notice.
Proof of age, such as a driver’s license or birth certificate.
Federal and state income tax returns from the prior year to verify household income.
Documentation of your current fire and casualty insurance.
A lien recording fee, typically in the range of $80 to $92, to record the recovery agreement.

Everything has to reach the county collector by March 1 of the year you want the deferral to cover. The deadline is hard, and the program requires a fresh application every year. Miss it and you wait a full cycle.¹

Interest and When the Bill Comes Due

Deferred taxes accrue simple interest at 3% per year for the 2023 tax year and any year after. Deferrals from tax years before 2023 continue accruing at the older 6% rate. The state records a lien against your property to secure the debt, and no sale or transfer can legally close and be recorded until the full balance plus interest is paid, unless the county collector certifies in writing that a repayment arrangement is in place.³

Three events trigger repayment:

Sale or transfer of the property. The full balance must be paid before the transaction can close and be recorded.
Loss of homestead status. If the property stops being your qualifying residence, you have 90 days to repay everything owed.
Death of the participant. Heirs have one year from the date of death to repay the deferred taxes and interest.

A surviving spouse can keep the deferral going instead of paying the lump sum, but only if the spouse is at least 55 years old within six months of the participant’s death and signs a new recovery agreement before the deferred taxes come due. Any additional taxes deferred under the spouse’s agreement get added to the existing balance when calculating the 80% equity cap.³ Families who don’t know about the deferral can be caught off guard by a lien that has quietly grown for a decade or more, so tell your heirs it exists.

Stacking With Other Senior Property Tax Relief

The deferral is not the only property tax break available to Illinois seniors, and you can generally layer these benefits.

The Senior Citizens Homestead Exemption reduces your property’s equalized assessed value annually. The maximum reduction is $8,000 in Cook County and contiguous counties, and $5,000 elsewhere in the state. You must be 65 or older and an owner of record who lives in the home.
The Senior Citizens Assessment Freeze, often called the “Senior Freeze,” locks the equalized assessed value at the level it was when you first qualified. Your tax bill can still rise if rates increase or you add improvements, but the assessed value stays flat as long as you continue to qualify.

The homestead exemption and assessment freeze shrink the bill itself. The deferral postpones paying whatever bill remains. Combining all three can lower both the annual cost and the cash you need on hand each year.⁵

1
Illinois Department of Revenue. Senior Citizens Real Estate Tax Deferral Program Frequently Asked Questions (PIO-64)
2
Illinois General Assembly. Illinois Compiled Statutes 320 ILCS 30 – Senior Citizens Real Estate Tax Deferral Act
3
Illinois General Assembly. Illinois Compiled Statutes 320 ILCS 30/3 – Senior Citizens Real Estate Tax Deferral Act
4
Lake County, Illinois. Senior Citizen Tax Deferral Program
5
Illinois Department of Revenue. Property Tax – Exemption Information (PIO-74)