STATE HOUSE, BOSTON, JAN. 13, 2025.....Boston Mayor Michelle Wu filed a new tax relief package Monday to offset increases residents are seeing in tax bills this month, after the Senate last year killed a Boston home rule petition to temper the spikes.
Fiscal year 2025 third-quarter property tax bills were sent out on Jan. 1, and Boston residents likely saw sharp increases. Wu’s team projected that residential property tax bills in Boston will increase by an average 10.4% annually in 2025 as the city’s budget has grown and Beacon Hill did not agree to the mayor’s idea to shift more of the tax burden onto commercial taxpayers, which are seeing a drop in taxes due.
Wu’s new plan would return to the compromise she reached with business groups last fall, an approach that ultimately failed after property valuation data in December showed lawmakers that residential tax bills would not rise as sharply as originally projected. If such a reduction isn’t approved by March, Wu’s proposal would then provide residential rebates, money that could flow to taxpayers during the mayoral election season.
“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,” a press release from Wu’s office said.
Wu’s proposal will need Boston City Council approval before it is sent to Beacon Hill.
Her office is once again looking to shift more of the tax burden onto commercial property owners to mitigate the increases for residents. Commercial properties, on average, are seeing a decrease in their taxes in 2025 — but already shoulder significant revenue generation for the city, taxed at 2.5 times the rate of residential properties in Boston.
“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 the 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 dollars less than the previous year. For office buildings, the tax decrease was even larger: a 7% drop,” Wu wrote in a letter to city councilors.
Wu’s new legislation would set the fiscal year 2025 tax rate to allow a maximum commercial shift of 181.5 percent in fiscal year 2025 -- which is the same as the compromise level her office agreed upon in October with Greater Boston Chamber of Commerce CEO Jim Rooney, Boston Municipal Research Bureau Interim President Marty Walz, NAIOP CEO Tamara Small and Massachusetts Taxpayers Foundation Doug Howgate.
State law allows cities and towns to tax residential and commercial real estate at different rates and to push the commercial rate as high as 175 percent of what a single, unified rate would have been.
The compromise that Wu’s office made with business groups last year covered a three-year period, allowing a maximum commercial shift of 181.5 percent in fiscal 2025, 180 percent in fiscal 2026 and 178 percent in fiscal 2027.
Wu’s new version of the proposal would establish the same tax classification levels for fiscal years 2026 and 2027 as were agreed upon in last year’s compromise, “in order to provide future stability for residential and commercial taxpayers through this period of economic transition.”
The press release specifies that the legislation would need to be passed by March in order to affect the fiscal year 2025 tax rate, as “this would allow for relief by adjusting the final quarterly property tax bill for the fiscal year in April 2025.”
The compromise petition has already received approval once from the Boston City Council and the House of Representatives, before it hit a dead end in the Senate.
As included in the earlier compromise petition, the new proposal gives the city the authority to appropriate up to $15 million per year in small business relief, and also will seek to raise the personal property tax exemption threshold for small businesses from $10,000 to $30,000. This would expand the number of small businesses exempt from personal property tax from about 2,500 to 5,000, according to Wu’s office.
It seeks to expand property tax relief for low-income seniors by modifying the eligibility criteria for the so-called 41C senior tax relief program, as well as increasing the amount of the exemption.
If the petition is not passed in time to change the fiscal year 2025 tax rate, it includes a provision to give the city the legal authority to issue residential tax rebates from surplus funds.
Boston Democrat Sen. Nick Collins -- who was the first senator to try to publicly halt Wu’s earlier version of the legislation in the Senate -- said he believed the City Council should instead provide targeted relief to residential homeowners.
“I think that’s something that’s viable, that would have support here in an expedited fashion,” he said.
Opponents of Wu’s property tax plans have contended that City Hall should instead look to trim its budget -- which grew 8 percent over the prior year -- or dip into savings to help soften any impact of tax increases.
Though Collins represented the face of the opposition, he was not alone in shooting down Wu’s proposal at the end of last year.
Powerful Democrat Sen. William Brownsberger, who represents part of Boston, also said he had “strong reservations about this proposal to alter the rules in an ad-hoc manner,” and Senate President Karen Spilka said in a statement that the idea did not have enough support to bring it to the floor.
