May 2024 PPRT Statement

Effective July 2023, IDOR adjusted its tax processing system to more accurately estimate future reallocations of Personal Property Replacement Tax (PPRT) and Local Government Distributive Fund (LGDF) distributions as required by statute. Due to the timing of the tax processing system update, it was expected that the reconciliation of payments and returns for tax year 2022 would result in a similar reallocation as occurred in 2021. However, due to a substantial quantity of amended tax returns, the reconciliation of tax year 2022 resulted in a greater reallocation than in tax year 2021.

The reallocation of tax year 2021 and 2022 receipts was caused by tax policy changes, such as the federal government enacting the State and Local Tax (SALT) deduction cap, the State of Illinois creation of the Pass-Through Entity Tax (PTE), and large increases in business income tax receipts.

The reallocation in fund distributions, which state statutes require, resulted in an increase in FY’24 LGDF allocations and a reduction in FY’24 PPRT allocations to taxing districts. The same will occur for the upcoming FY’25.  This reallocation will result in a PPRT reduction for FY’25 of $1.021 billion compared to the $818 million reduction that occurred in FY’24.

May 30, 2024