Boston’s Tax Rate Set for FY18

The property tax value increased by $10B or 7%  

Continued extraordinary new growth from new development is pumping up Boston’s annual property tax levy to support its growing operational expenses. Boston is fortunate that its levy growth is occurring at a time when state aid for operations has been relatively flat in recent years.  However, the City must prepare for the eventual slowdown in the economy and less robust increases in new growth.

Tax Value – Strong growth in the existing property value and even greater new growth from building construction and change in property tax status increased Boston’s total taxable value in FY18 to $153.9B, a jump of $10B or 6.9%.  Last year’s value growth was $15.9B or 12.4%.  By class, the percentage growth in FY18 was nearly equal between business and residential property.  The valuation date for FY18 was January 1, 2017, which captured the market activity of 2016.

Boston’s Taxable Value

Figures in Billions

FY17 FY18 $
% of
Total Value
CIP* $50.5 $54.0 $3.6 7.1% 35.1%
R $93.5 $99.9 $6.4 6.9% 64.9%
Total $143.9 $153.9 $10.0 6.9% 100%
* CIP = Commercial, Industrial, Personal  R = Residential

New growth from new construction and change in property tax status is expected to add $77.6M in FY18 tax revenue for Boston, which exceeds last year’s new growth of $75.5M.

Tax Levy – The City’s property tax levy in FY18 totals $2.2B, an increase of $129.8M or 6.2%, which compares to a 6.4% increase last year.  The $2.2B tax levy is at its maximum legal limit except by a Proposition 2½ override vote.  The standard 2.5% increase in the base levy produced an increase of $52.2M and new growth contributed $77.6M or 60% of the total.  The FY18 business tax rate of $25.20 is the lowest in 16 years, but because of the City’s application of full classification, business property represents 35.1% of taxable value, but pays 61.4% of the property tax levy.

Boston’s Tax Levy

Figures in Millions

FY17 FY18 $
% of
CIP* $1,280.7 $1,361.8 $81.2 6.3% 61.4%
R $806.0 $854.7 $48.7 6.0% 38.6%
Total $2,086.7 $2,216.5 $129.8 6.2% 100%

Tax Rates – Strong value increases resulted in tax rate decreases for the fifth year in a row to ensure that the tax levy did not increase by more than 2.5% each year, as required by Proposition 2½.  The FY18 residential tax rate decreased by 1.0% and the business tax rate decreased by 0.7%.

Boston’s Tax Rates

Per Thousand $ of Value

FY17 FY18 $ Change % Change
CIP* $25.37 $25.20 -$0.17 -0.7%
R $10.59 $10.48 -$0.11 -1.0%

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