Skip to main content
Transportation Funding & Financing

Tax Increments

Tax increment financing (TIF) is a way of raising local revenue that is commonly used to support the redevelopment of blighted areas. Using TIF, cities create special redevelopment districts and make public improvements in those areas to spur further development. TIF does not increase the level of tax liability of those benefiting from a TIF project; however, it does earmark a portion of the property tax revenues that the developer would have paid without TIF for specific purposes, which may include transportation improvements. During the development period, the tax base is frozen at the predevelopment level. Property taxes continue to be paid, but taxes derived from increases in assessed values (the tax increment) resulting from new development either go into a special fund created to retire bonds issued to originate the development, or leverage future growth in the district.

While tax increments are used more frequently for physical redevelopment of an area, they also may be used to finance local transportation improvements. Tax increment improvements can center around transit stations, for instance.

Resources

Tax Increment Legislation

A Primer on Tax Increment Financing - New York City Independent Budget Office
Illinois Tax Increment Association
Property Tax Increment Financing in West Virginia - West Virginia Development Office