Tax Increment Financing (TIF) Calculator
Project TIF revenue from assessed value growth, calculate bond capacity, and analyze tax increment over the district lifetime.
About this calculator
Tax increment financing works by freezing a district's property tax base at its pre-redevelopment value and directing the additional tax revenue generated above that frozen base — the increment — toward financing the redevelopment itself, rather than into the general tax rolls right away. This calculator projects that increment year by year: it grows the projected post-development assessed value by your entered annual appreciation rate, subtracts the frozen base value to isolate each year's increment, and applies your tax rate and capture percentage to get that year's TIF revenue. Capture percentage matters because not every taxing jurisdiction overlapping the district necessarily contributes its full share of the increment to the TIF fund — some negotiate to share a portion with schools or other districts rather than capturing 100%. Administrative costs are subtracted from total TIF revenue to get a net figure, reflecting that running a TIF district isn't free.
The bond capacity estimate answers the practical financing question a city actually cares about: given this projected revenue stream, how much can be borrowed upfront against it? It uses the present-value-of-an-annuity formula, discounting the average annual TIF revenue over the district's lifetime at the bond interest rate — this is the standard way municipal finance calculates how large a bond issuance a projected revenue stream can support. The whole projection rests on your appreciation-rate assumption holding for the entire multi-decade district lifetime, which is inherently uncertain — a redevelopment that underperforms its projected value growth will generate meaningfully less increment, and by extension less bond capacity, than this estimate shows.
Inputs
Results
Total TIF Revenue
$20,272,725.00
≈ 48 average U.S. homes
Est. Bond Capacity
$12,024,328.00
≈ 29 average U.S. homes
How to Use This Calculator
- Enter Base Assessed Value, Projected Assessed Value, and Combined Tax Rate.
- Set TIF Duration, Annual Value Growth, and Bond Interest Rate.
- Adjust Increment Capture Rate, Administrative Costs as needed.
- Review Total TIF Revenue ($) and Est. Bond Capacity ($).
- Use Value Increment ($) and First Year Revenue ($) to inform your decision.
How the result changes with TIF Duration
| TIF Duration | Total TIF Revenue | Est. Bond Capacity |
|---|---|---|
| 13 | $9,060,249.00 | $6,748,389.00 |
| 19 | $14,280,419.00 | $9,465,132.00 |
| 35 | $32,245,858.00 | $16,087,009.00 |
What each input means
- Base Assessed Value
- Total assessed value of properties in the TIF district at the time of creation.
- Projected Assessed Value
- Expected total assessed value after redevelopment is complete.
- Combined Tax Rate
- Combined property tax rate (millage) applied to assessed value. Include all overlapping districts.
- TIF Duration
- Lifetime of the TIF district. Typical range is 15-30 years.
- Annual Value Growth
- Expected annual appreciation of assessed values within the district.
- Bond Interest Rate
- Interest rate for TIF bonds backed by increment revenue.
- Increment Capture Rate
- Percentage of the tax increment captured by the TIF district (some jurisdictions share with schools).
- Administrative Costs
- Percentage of TIF revenue consumed by district administration.
How this is calculated
Worked example, using the default values
- Identify Input Parameters4 parametersBase Assessed Value = 10000000, Projected Assessed Value = 50000000, Combined Tax Rate = 1.5, TIF Duration = 25 = 8 input(s) provided
- Calculate Total TIF RevenueTotal TIF Revenue20272725 = $20,272,725
- Calculate Est. Bond CapacityEst. Bond Capacity12024328 = $12,024,328
- Calculate Value Increment40000000 = $40,000,000
- Calculate First Year RevenueFirst Year Revenue600000 = $600,000
Engine last updated . Checked against 2 independently-derived tests — how we verify calculators. Built by Paul Gunder, a software engineer, not a licensed financial, medical, or legal professional.
Frequently Asked Questions
Why is the tax base frozen rather than growing with the whole district?
Freezing the base value at the pre-redevelopment level is the entire mechanism that makes TIF work — it isolates the additional tax revenue generated specifically by the new development from the revenue the district was already producing, and only that additional increment gets redirected to fund redevelopment costs. Without freezing the base, there would be no distinct increment to capture in the first place.
What does the Increment Capture Rate actually represent?
It's the percentage of the tax increment that actually flows into the TIF fund rather than going to overlapping taxing jurisdictions like school districts, which in some states negotiate to receive a share of the increment rather than having their portion fully captured. A capture rate below 100% directly reduces TIF revenue and bond capacity, even with identical assessed value growth.
How is bond capacity different from total TIF revenue?
Total TIF revenue is the sum of increment captured across every year of the district's life, paid out over time as it's collected, while bond capacity answers how much money could be borrowed today against that future revenue stream. Bond capacity is always lower than total TIF revenue because it accounts for the time value of money — a dollar collected in year 20 is worth less today than a dollar collected in year 1.
What happens if the district's assessed value doesn't grow as fast as projected?
Since every year's increment depends on the assessed value growing from the projected post-development value at the entered appreciation rate, slower-than-projected growth directly shrinks the increment, the annual TIF revenue, and the bond capacity that revenue can support. This risk is why many TIF bond issuances are structured conservatively against a lower-than-projected growth scenario.
Why does a longer TIF duration increase total revenue but not proportionally increase bond capacity?
A longer duration captures more years of increment, raising total TIF revenue, but bond capacity discounts each future year's revenue back to present value at the bond interest rate — money collected many years out contributes progressively less to what can be borrowed today. This is why extending district duration has diminishing returns on how much can actually be borrowed upfront.
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