Mayor Michelle Wu is renewing a push for a temporary shift in Boston’s property tax structure designed to limit increases on the residential sector by placing a larger burden on commercial properties.
The latest version adds the option of using surplus funds from the city’s budget as a fallback measure to reduce residential property taxes.
Fiscal watchdog group Boston Municipal Research Bureau and state Sen. Nick Collins have urged the $1.1 billion so-called “rainy day fund” be used to offset residential tax increases rather than raising the commercial sector’s share of the tax levy.
Like a similar version that failed to pass the state Senate in late 2024, the shift in the split tax rate requires approval by the Boston City Council and state Legislature. Months of haggling over details of the previous bill hit a last-minute snag in December, after Collins blocked the state Senate’s approval of a Home Rule petition with support from key legislative leaders after new property value numbers shifted the terms of the debate and saw business groups abandon the bill.
The latest version would take effect for the fourth-quarter tax bills and enables the city to set a tax rate for fiscal 2025 and 2026 reflecting the temporary larger split tax rate reached in a compromise backed by business groups last year.
But if the proposal fails, the city could issue “some degree of residential tax rebates from surplus fund” subject to council approval, the mayor’s office announced.
The legislation, submitted to the Boston City Council today, contains many of the same provisions of the original version, which emerged as a compromise that was backed by the Greater Boston Chamber of Commerce and NAIOP Massachusetts.
“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,” Wu said in a statement.
Third-quarter tax bills arrived in mailboxes over the past two weeks, along with the median double-digit increases forecast by the administration. The third quarter was the first tax bill in fiscal 2025 to reflect updated annual assessments showing the decline in commercial valuations, which placed a bigger burden on the residential sector.
Average residential tax bills increased nearly 15 percent in the fourth quarter, or $833 on an annualized basis, according to the administration, a jump it says is even greater in some neighborhoods. Commercial properties’ average tax bills declined 3.4 percent compared with the previous quarter.
The current proposal also contains the same provisions in the original bill that exempts the first $30,000 of small businesses’ personal property from taxes, and offers $15 million in small business relief and expanded tax relief for low-income seniors.
Opponents urged the administration to consider budget cuts or use of the surplus fund as an alternative to placing additional financial obligations on the commercial sector, particularly the struggling office and lab markets.