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These are descriptive case studies, not a recommendation that any one of these mechanisms would fund full property-tax abolition. All three examples involve a state removing part of the property-tax base (mostly business personal property), not real property generally - and all three still tax real property today. They're useful for studying how a state can legally design a transition, not as proof a similar mechanism could replace the much larger revenue at stake in eliminating property tax entirely.
Illinois: business personal-property tax, abolished 1979
Illinois is the oldest and largest example. The 1970 Illinois Constitution directed the legislature to abolish business personal-property taxes and replace the lost revenue - the replacement system took effect in 1979.
The state now collects Personal Property Replacement Taxes (PPRT) instead: 2.5% on net income for C corporations, 1.5% for partnerships/trusts/S corporations, and 0.8% on invested capital for public utilities. Illinois Department of Revenue estimates $2.366 billion in PPRT allocations for FY2027 to roughly 6,500 local taxing districts, following actual FY2026 allocations of $1.941 billion - a 21.9% year-over-year swing, illustrating real revenue volatility under this model.
Distribution still runs on a historical formula: 51.65% of collections go to Cook County districts, 48.35% to the other 101 counties, allocated largely by each district's 1976 (Cook) or 1977 (elsewhere) share of the old personal-property tax - nearly 50 years later. If a district's old personal-property tax had supported debt service, pensions, or another government body, the replacement payment must keep funding that obligation first.
Source: Illinois Department of Revenue, Personal Property Replacement Tax and PPRT estimates.
Wisconsin: personal-property exemption, 2024
2023 Wisconsin Act 12 exempted personal property from property tax starting with the January 1, 2024 assessment (with limited exceptions, including property assessed as real property). In exchange, Act 12 created a recurring state aid payment under Wis. Stat. ยง79.0965, equal to the property tax previously levied on the newly exempt personal property - first paid in May 2025, to counties, municipalities, school districts, technical colleges, special districts, and tax-incremental districts. Local levy limits were also adjusted so the replaced levy isn't simply re-added on top of the state aid.
Wisconsin DOR reported an overall Act 12 aid budget of $173.8 million for both the 2026 and 2027 estimate cycles - and that claims exceeded that amount, triggering a payment-factor reduction across recipients.
Source: Wisconsin Department of Revenue, Act 12 Personal Property Aid FAQ.
Rhode Island: $50,000 tangible-property exemption, 2023
Rhode Island enacted a statewide $50,000 exemption for business tangible personal property (computer equipment, office furniture, equipment), beginning with the December 31, 2023 assessment. The state paired it with reimbursement to cities and towns starting FY2025 - calculated as the difference between the pre-exemption tangible-property levy and the post-exemption levy - and barred municipalities from raising tangible-property rates to offset the exemption themselves.
Rhode Island separately phased out its motor-vehicle excise tax, with the state reimbursing municipalities and fire districts for the foregone revenue - the revised FY2024 budget carried $234.7 million for that program, a second and much larger example of the state assuming a former local revenue stream.
Source: Governor's FY24 budget announcement; Rhode Island Office of the Auditor General, Municipal Financial Trend report.
What these three cases actually demonstrate
- A government can legally abolish a category of property tax and create a different, centrally administered replacement revenue stream.
- Replacement can be run centrally (by the state) while distributions still reach thousands of individual local governments.
- Historical allocation formulas (Illinois's 1976/1977 base years) can keep shaping who gets what for decades after the original tax is gone.
- Replacement revenue is not automatically stable - Illinois's PPRT swung 21.9% in one year, and Wisconsin's claims exceeded its own budgeted aid.
- Existing debt, pension, and service obligations tied to the old tax can constrain how freely replacement money can be spent.
- None of these states abolished real-property tax - all three still tax real property today. Removing one tax category doesn't by itself remove the spending it used to fund.
Sources: the official sources linked at the end of each state’s section above. Further official sources used for these case studies: Wisconsin Department of Revenue, 2023 Act 12 information, personal property exemption, and Committee on Town, Village & City news items of 2025-08-15, 2026-05-04 and 2026-08-14; Rhode Island Annual Comprehensive Financial Report, June 30, 2023 and Office of Management and Budget executive summary.