FY22 Property Taxes
Thanks to a pre-pandemic surging economy and smart policies, property values in Boston have risen steadily. In FY20, property values increased by $11.7 billion (7.1%), and in FY21, property values increased by $14.5 billion (8.2%), currently totaling $190.7 billion.
The City is mindful of effects of COVID-19 on property values in the City, and continues to monitor its impacts.
Tax Share and the Tax Rate
In FY21, residential tax payers account for 42% of the total tax levy. Commercial, industrial, and personal properties account for the remaining 58%.
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 FY21, the residential tax rate is $10.67 for every one thousand dollars of value. Commercial, industrial, and personal rates are $24.55 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 FY21 net effective tax rate of 1.4% 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 five 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 FY20 indicated the potential for $8.2 billion in construction activity compared to an estimate of $7.4 billion in FY19.
In FY22, the City expects new growth to decrease to $45 million, due to an expected slowdown in the local and national economy, as well as the impact of the two-month non-essential construction pause enacted in spring 2020 due the pandemic. As was evident during the Great Recession, new growth revenue is volatile and depends on the development cycle and the local, state, and national economies.