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September 30th is the annual deadline for the proper expenditure or return of excess tax increment. Excess increments, in general terms, are tax increments that exceed the amount necessary to pay the costs authorized by the TIF plan.

An authority may only use the excess increment to:

  • Prepay any outstanding bonds;
  • Discharge the pledge of tax increment for any outstanding bonds;
  • Pay into an escrow account dedicated to the payment of any outstanding bonds; or
  • Return the excess amount to the county auditor.

The TIF Act requires development authorities to annually determine the amount of excess tax increment for districts. The Excess Increment Calculation (EIC) Tab of the TIF Annual Reporting Form is used to determine and report the existence of excess increment. That determination must be based on the TIF plan in effect for the district on December 31 of the previous year, and on the increments and other revenues received by the district through that year.

The county auditor must redistribute any returned excess increment to the city or town, county, and school district in which the TIF district is located in direct proportion to their respective local tax rates.

For more information, please refer to our Statement of Position Redistribution of Tax Increment.

Published: September 2018

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