Tax increment financing (TIF) is a method of reallocating property tax revenues that are a result of an increase in taxable valuation above a "base valuation" figure within a tax increment area. Until the tax increment debt within an area has been repaid, tax revenues produced by property tax levies imposed on the increased taxable valuation by a city, county, school district, area school or any other taxing jurisdiction are all allocated back to the jurisdiction (city, county or community college) that established the tax increment area, and must be spent by that jurisdiction for projects within that area.
For example, a land property has a certain value in dollars, and therefore pays a certain amount in property taxes. If the value of this property increases because of improvements made by a developer, the property taxes will increase. If this property had been designated as TIF by the City Council, then a greater portion of those increased property taxes would go back to the city, to pay for any improvements the City made.
For a more detailed description of TIF and how it is implemented by city governments, please click here for an article from Iowa League of Cities website.