Land records · Parcel maps · October 7, 2026
Payment in Lieu of Taxes (PILOT) Explained
How a payment in lieu of taxes works: exempt or incentivized owners pay a negotiated amount instead of regular property taxes. Common uses and records.
Payment in lieu of taxes is an arrangement in which a property owner that is exempt from property tax, or that has received a tax incentive, agrees to pay a set amount to a local government instead of regular property taxes. Often called a PILOT, the payment helps offset the cost of public services that the property uses. PILOTs are common with nonprofits such as universities and hospitals, affordable housing projects, renewable energy facilities, and industrial projects financed through development agencies. The federal government also makes PILT payments to counties for certain federal lands. This page is general land-records background, not legal advice.
Common PILOT situations
| Situation | Typical arrangement |
|---|---|
| Nonprofit institutions | Voluntary payments to the city for services |
| Economic development | Agency holds title; company pays scheduled PILOT |
| Affordable housing | Payment based on a share of rents |
| Renewable energy | Payment per megawatt or fixed amount |
| Federal lands | Federal PILT payments to counties |
How economic development PILOTs work
In some states, a local development agency takes title to or leases the property, making it tax-exempt. The company then pays a scheduled PILOT, often starting low and rising over time, instead of full taxes. At the end of the term, the property returns to the regular tax roll. This is similar in effect to a property tax abatement.
Where PILOT money goes
Agreements specify how payments are distributed among the county, city, schools, and other taxing units. Distribution can be controversial if some units receive less than they would from full taxes.
Public records
PILOT agreements are usually public records available from the development agency, city clerk, or county. Recorded memoranda of lease or agreements may appear in the land records. Tax records may show the property as exempt with a PILOT notation.
PILOT vs TIF
A PILOT replaces taxes on a specific property with a negotiated payment. A tax increment financing district captures revenue growth in an area. Some projects use both.
What buyers should know
Buyers of property under a PILOT should review the agreement’s term, payment schedule, and transfer rules. Some PILOTs end on sale or require consent to assign. When the PILOT ends, regular taxes resume, which can raise costs sharply. See how is property tax calculated.
Example
A manufacturer builds a plant worth $20 million. The county development agency leases the site and grants a 15-year PILOT starting at 10 percent of full taxes and rising each year. After 15 years, the property returns to full taxation.
Reading the tax bill
A PILOT property may receive a bill showing the PILOT amount rather than regular tax calculations. See how to read a property tax bill.
Bottom line
A payment in lieu of taxes is a negotiated payment replacing regular property taxes for exempt or incentivized property, common with nonprofits, development projects, and energy facilities. Agreements are public and set terms and distributions. Buyers should check when a PILOT ends. Find county offices via the Platbookmapper map.
Payment in lieu of taxes FAQ
What is a PILOT agreement?
An agreement to pay a set amount instead of regular property taxes.
Who uses PILOTs?
Nonprofits, development projects, affordable housing, and energy facilities.
Is a PILOT the same as an abatement?
Similar in effect, but structured as a replacement payment.
Are PILOT agreements public?
Generally yes.
What happens when a PILOT ends?
The property usually returns to regular taxation.