Illinois Transfer Tax Explained: State, County, and City Rates
Illinois real estate transfer taxes are charged every time property changes hands, and they add up faster than most buyers and sellers expect — especially in Chicago. The state imposes a modest $0.50 per $500 of sale price, and the county adds another $0.25 per $500. But then Chicago layers on its own transfer tax at $3.75 per $500 (buyer) and $3.75 per $500 (seller), creating one of the highest combined transfer tax rates of any American city.
On a $400,000 home in Chicago, total transfer taxes exceed $6,000. In suburban DuPage County, the same sale generates about $600 in transfer taxes. That ten-fold difference is one of many reasons closing costs in Chicago are significantly higher than in the suburbs. Here’s the complete breakdown of how transfer taxes work in Illinois.
Illinois Transfer Tax Rates
| Level | Rate | On $400,000 Sale | Who Typically Pays |
|---|---|---|---|
| State of Illinois | $0.50 per $500 | $400 | Seller |
| County | $0.25 per $500 | $200 | Seller |
| City of Chicago (Seller) | $3.75 per $500 | $3,000 | Seller |
| City of Chicago (Buyer) | $3.75 per $500 | $3,000 | Buyer |
| Total (Chicago) | $6,600 | Split | |
| Total (Suburban, No City Tax) | $600 | Seller |
How Transfer Taxes Are Collected
Transfer taxes in Illinois are paid through the purchase of revenue stamps (or “transfer stamps”) at closing. The stamps are affixed to the deed before it’s recorded with the county recorder’s office. Without the stamps, the deed cannot be recorded, and the property transfer isn’t official.
State Transfer Tax
The state charges $0.50 per $500 of the sale price (or fraction thereof), which equals $1.00 per $1,000, or an effective rate of 0.10%. This tax is collected by the county on behalf of the state. By custom, the seller pays the state transfer tax in most Illinois transactions.
County Transfer Tax
Each county charges $0.25 per $500 (effective rate of 0.05%). This is collected alongside the state tax through the county recorder’s office. By custom, the seller also pays the county transfer tax.
Municipal Transfer Taxes
Some Illinois municipalities impose their own transfer taxes. Chicago’s is by far the largest, but several other municipalities have their own stamps:
| Municipality | Transfer Tax Rate | On $400,000 Sale | Who Pays |
|---|---|---|---|
| City of Chicago | $7.50 per $500 ($3.75 buyer + $3.75 seller) | $6,000 | Split buyer/seller |
| Evanston | $5.00 per $1,000 | $2,000 | Buyer |
| Oak Park | $3.00 per $1,000 | $1,200 | Negotiable |
| Mount Prospect | $3.00 per $1,000 | $1,200 | Seller |
| Schaumburg | $3.50 per $1,000 | $1,400 | Seller |
Not all suburbs have municipal transfer taxes. Many DuPage, Lake, and Will County municipalities charge nothing beyond the state and county stamps. Always check with the specific municipality before closing to confirm any local transfer tax obligations.
Chicago’s Transfer Tax — A Closer Look
Chicago’s combined transfer tax rate of $7.50 per $500 (1.50% of the sale price) is one of the highest municipal transfer tax rates in the country. In 2024, Chicago voters approved an additional “Bring Chicago Home” tax restructuring that created a progressive transfer tax on higher-value properties:
| Sale Price Tier | Combined Rate (per $500) | Effective Rate |
|---|---|---|
| $0 – $999,999 | $7.50 | 1.50% |
| $1,000,000 – $1,499,999 | $10.00 | 2.00% |
| $1,500,000+ | $15.00 | 3.00% |
For the vast majority of Chicago home sales (below $1 million), the rate remains $7.50 per $500. The increased rates primarily affect luxury residential sales and commercial transactions. On a $500,000 Chicago home, the buyer pays $3,750 and the seller pays $3,750 in Chicago transfer tax alone, plus $500 combined for state and county stamps — $8,000 total in transfer taxes.
Exemptions from Transfer Tax
Certain transfers are exempt from Illinois transfer taxes:
- Transfers between spouses: Including those incident to divorce
- Transfers to trusts: When the grantor remains the beneficiary (revocable living trusts)
- Inheritance: Transfers by will or intestate succession
- Government transfers: Sales to government entities
- Tax sales: Properties sold at tax sale
- Sales below $100: Transfers with nominal consideration
- First-time buyer exemptions: Chicago offers a partial transfer tax exemption for qualifying first-time buyers purchasing homes under certain price thresholds
If you believe your transaction qualifies for an exemption, your real estate attorney should prepare the appropriate exemption documentation for filing with the transfer tax stamps.
How Transfer Taxes Affect Your Closing Costs
Transfer taxes are a significant component of Illinois closing costs, particularly in Chicago. Here’s how they fit into the total closing picture:
| Closing Cost Component | Chicago Buyer | Suburban Buyer |
|---|---|---|
| Transfer Tax (Buyer’s Share) | $3,000–$4,000 | $0–$600 |
| Attorney Fees | $500–$1,500 | $500–$1,500 |
| Title Insurance | $400–$800 | $400–$800 |
| Loan Origination | $1,500–$3,000 | $1,500–$3,000 |
| Prepaid Items (Escrow) | $2,000–$5,000 | $2,000–$5,000 |
| Total Buyer Closing Costs | $7,400–$14,300 | $4,400–$10,900 |
The transfer tax difference between Chicago and the suburbs accounts for most of the closing cost gap. A Chicago buyer pays $3,000–$4,000 more in transfer taxes alone compared to a buyer in a suburb without a municipal stamp.
Use our closing cost calculator to estimate your total closing expenses, and our mortgage calculator to understand your monthly payments. For the complete guide to Illinois closing costs, read our Illinois closing costs explainer.
Transfer Tax Comparison: Illinois vs. Neighboring States
To put Illinois transfer taxes in perspective, here’s how they compare to neighboring states:
| State | Transfer Tax Rate | On $400,000 Sale | Who Pays |
|---|---|---|---|
| Illinois (suburban) | 0.15% | $600 | Seller |
| Illinois (Chicago) | 1.65% | $6,600 | Split |
| Indiana | None | $0 | N/A |
| Wisconsin | 0.30% | $1,200 | Seller |
| Iowa | 0.16% | $640 | Seller |
| Missouri | None (some counties charge) | $0–$200 | Varies |
| Michigan | 0.86% | $3,440 | Seller |
Indiana charges no transfer tax at all, which is one more financial advantage for homebuyers considering a move across the border. Wisconsin’s rate is double Illinois’ base state/county rate but far below Chicago’s combined rate. Michigan’s rate is higher than Illinois’ state-level tax but still well below Chicago’s. The takeaway: outside of Chicago, Illinois’ transfer tax is unremarkable. Inside Chicago, it’s among the highest in the nation.
Impact of Transfer Tax on Investment Properties
For real estate investors, Chicago’s transfer tax creates a meaningful friction cost that affects buy-and-hold and fix-and-flip strategies. A Chicago investor buying a $350,000 property pays roughly $2,625 in buyer transfer tax at purchase and another $2,625 in seller transfer tax when selling — a combined $5,250 in transfer taxes alone for one buy-sell cycle. Add state and county stamps, and the total transfer tax drag on a single flip exceeds $6,000.
This cost structure favors long-term buy-and-hold investing in Chicago over quick flips. It also creates an incentive for investors to target suburban properties where municipal transfer taxes are low or nonexistent. Many suburban Cook County and collar county investment properties generate similar rental yields without the transfer tax burden at entry and exit.
When evaluating rental properties, factor transfer taxes into your total acquisition and disposition costs. Our mortgage calculator helps estimate monthly cash flow, and our property tax calculator shows the ongoing tax burden.
Recent Changes and Future Outlook
Chicago’s transfer tax structure changed significantly in 2024 when voters approved a progressive rate structure. Properties selling for $1 million or more now face higher rates (2.00% at $1M–$1.5M, 3.00% above $1.5M), with additional revenue earmarked for homelessness services. This increase primarily affects luxury residential sales and commercial real estate transactions.
The progressive structure has generated debate about its impact on Chicago’s luxury housing market. Some brokers report that sellers of high-end properties are factoring the increased transfer tax into their pricing, effectively passing the cost to buyers. Others argue that the tax is modest relative to the property values involved. Early data from 2025 showed no significant decline in luxury sales volume, though the sample period is still short.
Downstate municipalities have periodically considered implementing their own transfer taxes, but most lack the political will to add a new tax layer. The state and county rates have remained unchanged for decades and are unlikely to increase in the near term. Chicago’s rates, however, remain subject to city council action and could be modified through future ordinance changes or referendum.
Transfer Tax Exemptions
Not all property transfers are subject to Illinois transfer taxes. Several common exemptions exist that can save significant money:
| Exemption | What It Covers | Documentation Required |
|---|---|---|
| Transfers Between Spouses | Sales or gifts between married spouses | Marriage certificate |
| Divorce Transfers | Property transfers per divorce decree | Court order / divorce decree |
| Transfers to/from Trust | Moving property into your own revocable living trust | Trust agreement showing beneficial ownership |
| Tax Sales | Properties sold at tax sale | Tax sale deed |
| Government Transfers | Transfers to/from government entities | Government documentation |
| Transfers Under $100 | Nominal consideration transfers (gifts) | Affidavit of value |
The trust exemption is particularly relevant for Illinois estate planning. Moving your home into a revocable living trust to avoid probate does not trigger transfer tax — as long as you remain the beneficial owner. However, transferring property to an irrevocable trust or an LLC may trigger transfer tax depending on how the transaction is structured. Consult with your estate planning attorney before making ownership changes.
Transfer Tax and Selling
Sellers in Illinois typically pay the state transfer tax ($0.50/$500) and county transfer tax ($0.25/$500). In Chicago, sellers also pay their share of the city’s transfer tax ($3.75/$500). On a $400,000 sale in Chicago, the seller’s transfer tax burden is $3,600 — a meaningful chunk that should be factored into your net proceeds calculation.
When negotiating a sale, transfer tax responsibility is customary but technically negotiable. In a buyer’s market, sellers may offer to pay the buyer’s share as a concession. In a seller’s market, the standard division (buyer pays buyer’s portion, seller pays seller’s portion) typically holds.
For sellers calculating net proceeds, transfer taxes are a significant line item. On a $400,000 Chicago sale, the combined seller-side transfer taxes (state + county + city seller portion) total approximately $3,600. Add agent commissions (5–6%), attorney fees ($500–$1,500), and title costs, and seller closing costs typically run 7–9% of the sale price. Use our seller net proceeds calculator to see your exact take-home after all costs.
How Transfer Tax Affects Investment Property
Investors buying and selling properties in Chicago face a compounding transfer tax burden that significantly impacts returns. Each transaction triggers the full stamp calculation — buying a $300,000 two-flat costs $4,500 in buyer transfer taxes, and selling it later for $400,000 generates $3,600 in seller-side taxes. Round-trip transfer taxes on a single Chicago investment property can total $6,000–$10,000, which eats directly into profit margins.
This is one reason experienced Chicago real estate investors hold properties longer — the transfer tax penalty for frequent buying and selling reduces the attractiveness of short-term flips compared to markets with lower transaction costs. For investors comparing Chicago to Indiana or Wisconsin, where transfer taxes are a fraction of Illinois rates, the carrying cost analysis looks very different. Factor transfer taxes into every investment analysis alongside property taxes, insurance, and maintenance.
Compare With Other States
Considering other markets? Here’s how other states compare:
- Connecticut Conveyance Tax Explained: What Buyers and Sellers Pay
- Pennsylvania Transfer Tax Explained: What Buyers and Sellers Pay
- Michigan Transfer Tax Explained: State and County Rates
Frequently Asked Questions
How much is the transfer tax in Illinois?
State and county transfer taxes total $0.75 per $500 of sale price (0.15% effective rate) in all Illinois transactions. Municipal transfer taxes are additional — Chicago charges $7.50 per $500 (1.50%), making the total transfer tax on a Chicago property 1.65% of the sale price. Many suburbs charge no municipal transfer tax, keeping the total at 0.15%. On a $400,000 home, total transfer taxes are $600 (no municipal tax) to $6,600 (Chicago).
Who pays transfer tax in Illinois?
By custom, the seller pays state and county transfer taxes. In Chicago, the $7.50 per $500 city transfer tax is split: the seller pays $3.75/$500 and the buyer pays $3.75/$500. Municipal transfer tax responsibility varies by community — some charge the seller, some the buyer, some split. The allocation is ultimately negotiable between parties.
Are there transfer tax exemptions in Illinois?
Yes. Transfers between spouses, transfers to revocable living trusts, inheritances, tax sales, and certain government transactions are exempt. Chicago offers a partial transfer tax exemption for first-time buyers meeting specific criteria. Your real estate attorney should identify any applicable exemptions.
Why is Chicago’s transfer tax so high?
Chicago’s transfer tax generates approximately $200 million per year for the city’s general fund and, as of the 2024 restructuring, for homelessness services. The city has relied on this revenue source as an alternative to even higher property taxes. The 1.50% combined rate on most residential sales makes it one of the highest municipal transfer taxes in the country. Use our affordability calculator to factor transfer taxes into your purchasing budget.
Do I pay transfer tax when refinancing?
No. Refinancing your mortgage does not trigger transfer tax because the property isn’t changing hands. Transfer taxes are only imposed when ownership transfers through a sale, gift, or other conveyance. Use our property tax calculator to estimate your ongoing tax burden after any transaction.