Capital Absorption Opportunity · Place-based mechanisms
Tax Increment Financing Revenues (TIF)
Definition
Tax increment financing (TIF) is a state-law tool that lets a local government or redevelopment agency pledge the growth in property tax revenue (and, in some states, sales tax revenue) inside a district to pay for improvements or development costs there. Under federal tax law, a qualified redevelopment bond, a tax-exempt bond for redevelopment in a designated blighted area under state law, may be repaid from the increase in real property tax revenue the redevelopment produces if that increase is reserved exclusively for debt service.[1]
Federal law
Formed under state law. No Act of Congress creates it; the federal laws below apply to it as described.
- Tax Reform Act of 1986, Pub. L. 99-514, § 1301, 100 Stat. 2602. Federal tax treatment of TIF-backed bonds: private activity bond tests (26 U.S.C. § 141) and the qualified redevelopment bond secured by property tax increment (26 U.S.C. § 144(c)); TIF itself is state law. Official text: govinfo.gov, U.S. Government Publishing Office.