TIF Districts

Tax Increment Financing (TIF) - Purpose

Tax Increment Financing, also known as TIF, is an economic development tool used to assist a municipality in the redevelopment of a specific area that is blighted or showing signs of becoming blighted. A TIF district (area) is created as a joint investment by local taxing bodies to attract and retain private development and businesses, which in turn spurs growth in underperforming areas.

TIF works to create growth through an initial public-private investment. As property values increase due to the redevelopment, the increment in property taxes has a compounding effect generating increasing economic growth. A tax increment is the difference between the amount of property tax revenue generated before TIF district designation and the amount of property tax revenue generated after TIF designation. 

The TIF redevelopment project creates a vital cycle, increasing development and redevelopment in the area, such that when the TIF project ends — and Illinois law allows a TIF project to exist for a period of up to 23 years — all of the taxing bodies benefit from the new growth.

Tax increment financing is an effective economic development tool used in 48 states and in over 260 Illinois cities. It became a popular program after federal and state governments (including Illinois) began cutting back economic development programs in the 1960s and 1970s that cities could use to revitalize communities. Tax increment financing is one of the few remaining tools that local governments can use to attract new business, invest in infrastructure and rebuild blighted areas.