District Improvement Financing (DIF) is a financing method to promote economic development in Massachusetts. DIF allows a percentage of new property tax revenues from new development growth to be dedicated to support infrastructure, projects, and programs related to economic development. DIF is not a new or additional tax. 

As depicted in the left diagram above, all property tax goes to the general fund, including new tax revenues for a property that is improved.

As shown on the right diagram above, within an approved DIF District, a to be determined percentage of new property taxes from new growth is allocated to support projects in the DIF district. The remaining percentage of new growth goes to the general fund.

1. Tax Increment Capture: DIF measures the new growth in property value within a specific district and captures the corresponding rise in tax revenue. This Tax Increment is then allocated to fund various public projects within the district.
2. Funding Public Projects: The captured Tax Increment is channeled towards financing public projects that promote economic development and improve the community's infrastructure. These projects are decided upon by the community and must be situated within the defined DIF District.
3. Allocation of Tax Revenue: Within the approved DIF District, a predetermined percentage of the new property taxes generated from the increased property values is earmarked for supporting projects within the district. The remainder of the new tax revenue goes into the general fund.