What is the difference between a value increment and a tax increment?
Value increment – difference between the Tax Incremental District's (TID's) base value and current value. It is the property value amount that generates the tax increment.
Tax increment – taxes levied by all overlying taxing jurisdictions on the value between the TID's base value and current value. The municipality that operates the TID collects the taxes and uses them to pay for the approved project costs.
Who certifies the value increment annually?
The Wisconsin Department of Revenue (DOR) certifies the annual value increment by August 15 each year. DOR certifies the increment only if the municipality pays a $150 administrative certification fee for each active TID by April 15. If the fee is not paid, DOR will not certify the municipality's increment for that year.
When does the municipality receive its first tax increment on a new creation?
The date the municipality adopts the creation resolution determines when it will receive its first increment. The
TID Creation Timeframes table explains the timing of the first tax increment.
Does residential development in a TID produce value increment?
Yes. All taxable property value that increases a TID's value becomes part of the increment.
If personal property is located within a TID, is the personal property value included in the TID base value?
Yes. The TID base value includes taxable real estate and personal property within the TID's boundaries in the creation/amendment year. The current year TID value includes the real estate and personal property within the TID as valued each year by the assessor.
If a municipality received enough increment to pay the debt incurred for the district, can the excess increment be used for additional projects?
Yes. A municipality may use excess increment for additional projects if the expenditure period has not expired; however, only projects in the approved plan may be paid with TIF funds. If the project is not in the approved plan, the municipality must complete a project plan amendment and email the required documents to DOR.
If a TID terminates after April 15, is an increment still added to the tax levies in December?
Yes. If the municipality terminates a TID after April 15, DOR will certify a value increment for that year. The tax increment for that year must be levied and collected. See the
TID Termination Timeframes table for more information.
Should a municipality collect the entire final tax increment in the TID's last year if it is not all needed?
Yes. A municipality must collect the entire final tax increment to maintain equal taxation. State law (sec 66.1105(6)(c), Wis. Stats.), requires the municipality to return any surplus to the TID's overlying taxing jurisdictions.
Can a municipality choose not to levy the increment on the tax roll?
No. Wisconsin's constitution has a uniformity clause, which requires uniform taxation of property. By not levying the increment, the taxpayers in that municipality would be taxed at a different rate (for school, technical college, or county) than the other taxpayers.
How is the tax increment calculated using the tax rate?
Step a) First, a municipality must determine the tax rate per $1,000 of property value.
Example: The tax rate is $23.73. This amount is then apportioned to the taxing jurisdictions for that municipality.
|Taxing Jurisdiction||Tax Rate||Percent of Total Rate|
Step b) Multiply the tax rate by the value increment DOR certifies to determine the actual dollars available to pay eligible project costs.
Example: This is a new TID with a 2019 creation year. Changes to the increment value or tax rate result in a different tax increment.
|Year Assessed||Year Available||Increment Value||Tax Rate Percent||Tax Increment|
Every municipality with a TID must complete the Tax Increment Worksheet (Form PC-202) each December to calculate the actual tax increment based on the municipality's levy amount. See the detailed example in the
TIF Manual, How TIF Works.
How does the Wisconsin Department of Revenue (DOR) notify a municipality regarding its increment?
Each year (on August 15 and September 1), DOR posts TIF reports that list each TID's value increment to our website.