FY21 Property Taxes
Thanks to a surging economy and smart policies implemented by Mayor Walsh, property values in Boston had continued to rise steadily. In FY19, property values increased by $10.6 billion (6.9%), and in FY20, property values increased by $11.7 billion (7.1%), currently totaling $176.2 billion.
Tax Share and the Tax Rate
Residential properties have accounted for an average of 39% of the total tax levy since FY06. In FY20, residential tax payers account for 40% of the total tax levy and commercial, industrial, and personal properties account for the remaining 60%.
Classifying properties by residential, commercial, and industrial categories reduces the residential tax rate, the rate per thousand dollars of property value, to the lowest level allowed by law. Without it, residential taxpayers would see their properties taxed at a much higher rate. As can be seen in the graph to the right:
- Rates Increased in the years following the Great Recession (FY08-FY13), when property values decreased significantly due to the burst of the housing bubble.
- Starting in FY14, rates have decreased thanks to the acceleration of development and the recovery of the economy.
- In FY20, the residential tax rate is $10.56 for every one thousand dollars of value. Commercial, industrial and personal rates are $24.92 for every one thousand dollars.
Property Tax Rates
Proposition 2 1/2
Property Tax Levy and Levy Ceiling
Due to years of strong new growth increases, the City has some space between its FY20 net effective tax rate of 1.42% and the tax levy ceiling of 2.5% of total assessed values.
Proposition 2 ½ was enacted in 1980 by voter initiative, to constrain and limit the annual property tax levy in Massachusetts cities and towns. The law includes two types of limits:
- The Levy Limit - Each year, the City can raise its tax levy by up to 2.5% over the previous year’s levy limit. New growth, which represents additions to the City’s tax base over the previous year, is added to the levy as well.
- The Levy Ceiling - The tax levy cannot exceed 2.5% of the total assessed value of all real and personal properties in the City.
To learn more about tax collection and assessments in Boston, please use the following resources:
Property Tax Levy Increase by Type
Property tax growth from new growth has exceeded growth from the allowable 2.5% increase in 24 of the last 35 years.
During the past four years, the City saw notable construction projects in Boston enter the City property tax base for commercial, mixed-use, and residential properties. According to the BPDA, the estimated revenue from building permit fees during FY19 indicated the potential for $7.2 billion in construction activity compared to an estimate of $5.5 billion in FY18.
New growth is projected to total $65.0 million in FY21, the highest amount ever budgeted for new growth. However, as was evident during the last recession, new growth revenue is volatile and depends on the development cycle and the local, state and national economies.