TIF Credit Payments

There are several property tax credits that are apportioned and distributed to TIF districts that should be identified and treated as tax increment by TIF authorities.

The definition of tax increment includes taxes paid by the captured net tax capacity. After the total amount of taxes on a parcel is determined, any credits are applied and the property owner pays the remaining amount. The state then reimburses the applicable taxing jurisdictions for the amount of the credit so that the total amount of taxes determined for a parcel is fully paid. To the extent the credits reduce a share of the total tax, a portion of the credit reimbursement is apportioned to the TIF share of the tax. Therefore, these credit reimbursements are tax increment and subject to the restrictions of the TIF Act. As a result, the funds need to be segregated and otherwise treated as tax increment.

Although most districts are not affected, the Department of Revenue (DOR) apportions credits to TIF when appropriate. Apportionments are made for several credits (Disparity Reduction Credits, Supplemental Taconite Credits, Disaster Credits, and Agricultural Homestead Market Value Credits). DOR pays these TIF credits with other credit reimbursements to cities on December 26th. Taconite Credits distributed by the county may also be apportioned to TIF.

The settlement information pertaining to the credit payments can be a bit cryptic, but the TIF share of credits should be labeled as “TIF”. The DOR website will contain a document identifying all TIF credit distributions on a page titled “Market Value Credits for TIF Districts.”

Last referenced December 17, 2021 in the State Auditor's E-Update.