Mayor Michelle Wu Refiles Residential Tax Relief Legislation

Mayor Michelle Wu today introduced an expanded residential tax relief package aimed at providing financial assistance to Boston residents impacted by sharp increases in their Fiscal Year 2025 third-quarter property tax bills that were sent out on January 1st. The refiled home rule petition will help Boston’s residents as their property tax bills have increased due to national economic trends that led to the single largest jump in the residential share of the property tax levy since 2007, while commercial taxpayers saw a significant drop. The legislation would provide immediate relief for residents with the same measures agreed upon by business groups through compromise legislation after months of negotiation last year, and includes provisions to provide for residential tax rebates if the tax rate is not adjusted, and increased exemptions to support small businesses and seniors. 

“For too many residents, this sharp tax spike is a burden that makes it even harder to pay bills and afford to stay in the city they call home,” said Mayor Michelle Wu. “I urge legislators and all stakeholders that held up the passage of our negotiated compromise to look carefully at the serious impact on Boston residents and join us in delivering the balanced relief our community needs.”

Last year, Mayor Wu negotiated compromise legislation with business leaders that further amended the tax relief home rule petition that had already been passed by the Boston City Council and the House of Representatives. Although this compromise legislation received a second round of approvals through the Council and House, it never received a vote before the State Senate after a single Senator used a procedural block three times during informal session last month. In ending session without a vote on the legislation, members of the Senate and business groups walked away from the agreed upon compromise legislation that had been advanced a second time through the Council and House at their direction, suggesting that the City of Boston’s final property valuation numbers were not as dire as the worst case scenarios outlined, so residents should absorb the impending tax increases.

Since then, residents across Boston have received their Fiscal Year 2025 third quarter tax bills, reflecting very significant increases. The taxes for the average single family home receiving a residential exemption increased 10.4%, which is nearly $575 for the year and a 21% bill-to-bill increase. When expanded to include additional residential property types—not only single family homes but also duplexes, condos, and standalone apartments without commercial components—average annual taxes increased 14.9%, around $833 for the year, or a 30% bill-to-bill jump. These averages mask the variation across different neighborhoods and properties, and it has been widely documented that many residential taxpayers received a significantly higher increase due to a combination of regular market value changes and the added impact of the commercial tax responsibility shift that the administration sought to avoid through legislation. While individual value changes vary by neighborhood and individual property, the overall shift of commercial responsibility increases the burden on residents across all residential property types and neighborhoods. 

Overall data analysis shows that more than 55% of all residential property owners received a bill with an annual increase greater than 9% (or quarter-to-quarter bill jump of more than 18%). Had Mayor Wu’s compromise legislation been approved by the State Senate last month, this would have been reduced to 21.5% of residential properties with such a significant increase. With these January bills, the average commercial property received a 3.4% reduction in taxes—about $7,745 less than the previous year. For office buildings, the tax decrease was even larger: a 7% drop.

Now that the scale of tax increases is documented and clear, this refiled home rule petition proposes to provide immediate needed relief to residential taxpayers this year through the same compromise tax rate agreed upon after months of negotiations and legislative process, as well as adopting the multiyear rates agreed upon for tax stability over the next two years. Additionally, this legislation has been updated to include new provisions that address specific concerns raised through that legislative process. In sum, this new legislation: 

Sets the FY25 tax rate to levels which were agreed upon by business groups and previously voted on by the Boston City Council and House of Representatives. This would allow for relief by adjusting the final quarterly property tax bill for the fiscal year in April 2025. The legislation would need to be passed by March 2025 in order to operationalize this measure.

Establishes tax classification levels between residential and commercial property in Fiscal Years 2026 and 2027, consistent with the levels that were previously agreed to in the October 2024 compromise legislation, in order to provide future stability for residential and commercial taxpayers through this period of economic transition.

As included in earlier compromise legislation, gives the City the authority to appropriate up to $15 million for any years that the commercial portion of the levy is greater than the amount currently allowed to offset potential impacts on small businesses due to the shift.

Expands property tax relief for low-income seniors by modifying the eligibility criteria for the 41C senior tax relief program, as well as increasing the amount of the exemption. These changes will modernize the dated criteria which has shrunk the pool of eligible applicants in recent years and will provide much needed financial assistance to a group of residents most impacted by property tax increases. 

As included in earlier compromise legislation, increases the exemption for small businesses on personal property to $30,000 so any neighborhood business with less than that amount in personal property would not be taxed. This increase would expand the number of small businesses across Boston exempt from personal property tax under this exemption provision from approximately 2,500 to 5,000. 

In the event the tax rate for Fiscal Year 2025 does not change as outlined above, gives the City of Boston the legal authority to issue some degree of residential tax rebates from surplus funds. The amount of money and the rebate shall be determined by the City of Boston and will be subject to an appropriation reviewed and approved by the Council. 

Earlier this month, the City developed a tax calculator so residents can see how much they would have saved if the earlier compromise legislation were in effect. The tax calculator can be found here: boston.gov/tax-calculator.

Mayor Wu has focused on making Boston more affordable for all residents since she assumed office. The Wu administration has created more affordable housing than in a generation, ensured more families become homeowners than ever before, implemented policies to reduce home energy costs over time, doubled the number of universal pre-K classrooms to serve nearly 1,550 3- and 4- year olds, boosted public transit ridership on free bus routes, and opened the doors of many of the city’s cultural institutions at no cost through Boston Family Days. 

Mayor Wu’s residential tax relief package, which is part of her affordability agenda, now goes to the Boston City Council for approval before heading to the State House for legislative consideration.