Tax Increment Financing (TIF). TIF funds economic development activities in a designated
area by earmarking property tax revenues from anticipated increases in assessed property values
resulting from investment in that district. All four states have programs allowing TIF, generally limited
to geographic areas meeting certain criteria.
Targeted Area or Industry Investment. All four states provide property exemptions or credits
for business investment in certain designated “zones.” In Connecticut, the main program is the
Enterprise Zone (EZ) program, but other types of zones (e.g., entertainment districts and defense
plant zones) fall under the program’s umbrella. (OLR Report 2020-R-0252 provides more information
on the EZ program.) Other programs include New York’s Empire Zones and Banking Development
Districts, Massachusetts’s Economic Development Incentive Program, and New Jersey’s Garden
State Growth Zones.
Housing. Connecticut, New York, and Massachusetts authorize several property tax exemption
programs to encourage the development of low- or moderate-income housing in certain areas, most
of which are local option programs. Massachusetts’s workforce housing special tax assessment
program, for example, allows municipalities to provide a five-year tax abatement to encourage the
development of middle-income housing in designated areas.
Incentives for Specific Property Improvements
States use tax relief to incentivize property owners to undertake targeted improvements that meet
their goals. All four states provide tax credits or exemptions for various pollution control or
remediation activities (e.g., brownfields). Massachusetts and New York provide exemptions or
assessment reductions for certain improvements to historic property. New York and New Jersey
provide exemptions for projects designed to accommodate seniors or people with disabilities.
Residential Property Tax Relief Programs
All the selected states have programs designed to ease the tax burden on homeowners and renters.
New York is the only state that has a broad-based tax relief program; its STAR (School Tax Relief)
program provides exemptions or credits to most homeowners. The programs offered by the selected
states offer are targeted to certain populations. All four states also provide, or authorize local
governments to provide, tax credits, rebates, or exemptions to homeowners, and in some cases
renters, who are (1) seniors, (2) people with disabilities, or (3) veterans or their surviving spouses.
Most of these programs are limited to people with incomes under certain thresholds. Other
exemptions include those for (1) first responders (Connecticut, Massachusetts, and New York), (2)
those experiencing financial hardship (Massachusetts), and (3) clergy (New York).