Tax abatement can be defined as a short-term elimination of increased real property taxes, characteristically provided as incentive for new growth or as a motivation for redevelopment. Such economic development tax abatement basically helps business and property owners to increase their capital investment which in turn enlarges the tax base, generates and keeps good paying jobs, and expands the local economy. In the USA, the Department of Community Development's Division of Neighborhood Development administers the tax abatement program. This department is accountable for the administration of tax abatement for housing, homeowners and residential developers. It needs to be known that tax abatement does not come with 100% tax incentives. Further, it is to be noted that the swell in the assessed value because of the project will steadily phase over in one to ten year duration. Different states view tax abatements differently. The City of Indianapolis, for instance, views the granting of tax abatement as a public sector investment in the company. It, accordingly, makes an evaluation of each applicant on the basis of the policy criteria when making a proposal to the Metropolitan Development Commission for tax abatement. If we have to look at the historic aspect of tax abatement and the subsequent economic development, we must point out that it was first authorized by the State in 1977. The idea back then was to give the government the opportunity for certain businesses to phase-in those new taxes that would otherwise be assessed to their property because of new building construction or the purchase of new equipment for manufacturing, research and development and information technology. For this reason, the businesses that were to be provided tax abatement were located in industries like manufacturing, warehousing and distribution. Presently, the major benefit from tax abatement is to encourage reinvestment by existing businesses. The focus is that the government is not interested in penalizing businesses with large tax bills when they are not in a position to afford it. Leniency is shown also because they have done an improvement by investing money in their facilities, and because such companies are creating/providing job opportunities for the citizens. It is true that without this tax incentive, businesses would not be goaded to make committed investments of capital with a view to improving their operations. Besides, the term development area would not be heard so commonly by people as the case seems to be these days. This might have given you enough hints about how economic development tax abatement is used to increase economic development these days.