Property Tax is typically levied by local governments on real property only.  However, in some states, including Wisconsin, property tax is levied on real property and personal property, which means that TIF assistance received by a project in Wisconsin may include both real property tax increment and personal property tax increment.  Because personal property often depreciates quickly, however, the amount of personal property tax increment will likely decrease dramatically during the assistance period. 

In Wisconsin, the State Department of Revenue applies a conversion factor to the original cost of personal property to assess personal property’s remaining value after depreciation. The conversion factor varies in accordance with the time that personal property was purchased. For instance, to determine the 2010 assessed value, shop equipment purchased in 2009 is assessed at a value equal to 92.5% of its original cost while shop equipment purchased in 2003 is only assessed at a value equal to 39.4% of its original cost.

The Illinois Legislature is currently considering an Amendment to the Tax Increment Allocation Redevelopment Act that would change the way the total initial equalized assessed value (EAV) of a Redevelopment Project Area is calculated.  Currently, the total initial EAV is established after a Redevelopment Project Area is created and once that total initial EAV is certified, it remains the same throughout the life of the Redevelopment Project Area.

The proposed Amendment, which would go into effect on January 1, 2011 if adopted, is sponsored by State Senators Terry Link (30^th District) and Christine Radogno (41^st District).  It would require an annual increase in the initial EAV of a Redevelopment Project Area over the initial EAV of the previous year by the annual rate of increase of the Consumer Price Index.  The Amendment was introduced on February 9, 2010 and it has already been approved by the Revenue Committee.  If adopted, it would mean that each underlying taxing district in a Redevelopment Project Area could see an annual increase in the amount of property taxes received during the term of the TIF.