Local Real Estate Tax Exemption:

Massachusetts' version of Tax Increment Financing allows municipalities to provide flexible targeted incentives to stimulate job-creating development.

  • Negotiated Agreement between business and host municipality;
  • 5 year minimum, 20 year maximum or anything in between;
  • Business pays full tax rate on the "base value";
  • Exemption from property taxation on all or part of the increased value accrued as a result of development (the "increment");
  • Percentage of exemption may range from 5% to 100%;
  • Personal property tax exemption for both existing and new property;
  • M.G.L. 40 § 59 governs all TIF Agreements.

The TIF Plan

The TIF Plan, completed by the municipality, describes proposed public and private investment in the TIF Zone, and is agreed upon by the municipality and all the private owners in the TIF Zone. The municipality and the prospective Certified Project candidate agree to a property tax exemption based on a percentage of the value added through new construction or significant improvement for a period of no less than five and no more than twenty years.

The real estate taxes generated by the new increased assessed value are then allocated by the agreed-upon percentage of value added to one or more of three categories. The categories are:

  • Exemption from real estate taxes.
  • Payment of real estate taxes.
  • Payment of betterment fee in lieu of real estate taxes to finance related infrastructure.

Each category, if necessary, may change from year to year. The percentage of allocation is calculated in a formal, negotiated agreement between the municipality and the Certified Project candidate. TIF serves to pass the tax savings on to property owners for use in project development, while ensuring that the development risk is borne by those parties as well.