Tax Increment Finance (TIF)

Tax Increment Finance is a financing tool used to attract development or redevelopment to targeted areas.

The area in which TIF is being used is known as a Tax Increment Reinvestment Zone (TIRZ). By leveraging private investment for certain types of development within a targeted area, TIF can be used to finance new and/or enhanced public improvements and infrastructure.

The cost of improvements to the zone is repaid by the contribution of future tax revenues by each taxing unit that levies taxes against the property. Specifically, each taxing unit can choose to dedicate all, a portion of, or none of the tax revenue that is attributable to the increase in property values due to the improvements within the reinvestment zone. The additional tax revenue that is received from the affected properties is referred to as the tax increment. Each taxing unit determines what percentage of its tax increment, if any, it will commit to repayment of the cost of financing the public improvements.