FY26 Property Taxes

Property taxes continue to represent the City’s largest and most dependable source of revenue. In FY26, the budgeted net property tax levy totals $3.47 billion, providing 71.7% of the City's revenue.

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Thanks to a resilient economy and property market, robust pipeline of new construction, and strategic development policies, property values in Boston have risen steadily. Property values increased by $8.6 billion (4.1%) in FY24 and another $5.5 billion (2.6%) in FY25, currently totaling $226.4 billion.

While the Boston real estate market has demonstrated considerable strength in the face of the pandemic and current interest rates, the City continues to monitor the lingering effects on property values.

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Tax Share and the Tax Rate

Property Tax Rates

In FY25, residential tax payers account for 44% of the total tax levy. Commercial, industrial, and personal property account for the remaining 56%.

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 sudden collapse of the housing market.
Starting in FY14, rates decreased for several years thanks to increased development and the recovery of the economy, and since FY18, they have moved within a narrow range.
In FY25, rates have moved up slightly for all property classes compared to FY24. The residential tax rate is $11.58 for every one thousand dollars of value. Commercial, industrial, and personal rates are $25.96 for every one thousand dollars.

Proposition 2 1/2

Property Tax Levy and Levy Ceiling

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:

Due to years of strong new growth increases, the City's FY25 net effective tax rate of 1.5% is well below the tax levy ceiling of 2.5% of total assessed values.

New Growth

Property Tax Levy Increase by Type

The City saw notable construction projects in Boston enter the City property tax base for commercial, mixed-use, and residential properties in the last six years. According to the Boston Planning & Development Agency (BPDA), the revenue from building permit fees indicates the pipeline of new projects remains strong. This includes $9.5 billion in potential construction activity in FY23, and $7.4 billion in FY24.

In FY26, the City expects new growth of $60 million, a decrease from FY25's actual new growth. This budgeted value considers the impact of economic uncertainty from lingering price inflation and high interest rates on the construction industry. As was observed during the Great Recession, new growth is volatile and depends on the development cycle and the local, state, and national economies.

Property tax growth from new growth has exceeded growth from the allowable 2.5% increase in 14 of the last 20 years.