The tax comparison is the reason most Illinois buyers start looking at Lake County. Here is the honest version — including the part I will not answer for you.
The property tax gap is where the money is
Indiana operates a constitutional property tax cap — the circuit breaker — limiting property tax to 1% of gross assessed value for owner-occupied homesteads, 2% for residential rental, and 3% for commercial. Indiana's average effective rate runs roughly 0.83% to 0.85%; Illinois runs roughly 2.07% to 2.23%. On a $400,000 home, published comparisons put Illinois around $8,920 a year and Indiana around $3,360 — a difference of roughly $5,560 annually, or more than $55,000 over a ten-year hold. That is an illustrative comparison using published state averages. Your actual bill depends on your taxing district, your assessed value, and which deductions you qualify for. For a real number on a real property, contact the Lake County Assessor.
Income tax: smaller than you think
Illinois is a 4.95% flat state income tax. Indiana is a flat state rate of roughly 3% plus a county rate — Lake County levies its own local income tax on top of the state rate, so the combined rate is higher than the state rate alone; check the current Lake County rate before you rely on a number. The income tax gap is real but modest. The property tax gap is where the money is.
The question I will not answer for you
If you live in Indiana and work in Illinois, how is your income taxed? I have read published guides that directly contradict each other. Some describe a reciprocity arrangement where you owe only Indiana tax. Others say you file in both states and claim a credit on your Indiana return. Those are materially different outcomes and they cannot both be correct. I am a Realtor, not a CPA, and this is exactly the kind of question where a confident wrong answer costs you real money. Talk to an accountant who handles cross-border returns before you make a decision that depends on the answer. If you need a referral, I am glad to make one.
One thing to check that people forget
If you buy in 2026, verify your homestead deduction is on file with the Lake County Auditor. Starting with bills payable in 2027, Indiana homeowners with a homestead on file receive a credit of 10% of their property tax bill, capped at $300, applied after all other deductions. Refinancing, changing ownership, or moving a property into a trust can all disturb it. It takes one phone call to confirm and it is worth making.
What the comparison does not capture
Indiana sales tax is 7%. Illinois base is 6.25% — Indiana is higher on that line. Cost of living index puts Indiana at 90.5 against Illinois at 96.4, with 100 as the national baseline.
