Boston’s Tax Rates Set for FY20

New growth revenue reaches historic high of $99.5M

Continued growth in total taxable property value, predominantly from new development, enabled a property tax levy increase of $158.9M for FY20. The dynamics of residential versus business value growth contributed to a slight increase in the residential tax rate.

Sustained Growth in Value Boston’s total taxable value increased by $11.7B to $176.2B from FY19 to FY20, rising by 7.1%. Residential growth slightly outpaced business growth 7.6% to 6.1%. The percentage increase in value for both were closely consistent with rates over the prior three years, before which rates of value growth for both were in the double-digits for consecutive years. The valuation date for FY20 was January 1, 2019, which captured the market activity of 2018.

Tax Levy The City’s property tax levy increased by 6.8%, or $158.9M, to $2.5B from FY19 to FY20. The $2.5B maximizes the City’s tax levy per legal limits, except by a Proposition 2½ override vote. New growth—additional taxable property value generated by new construction and renovations—continues to be a significant driver of the levy increase. Revenue from new growth is expected to hit an all-time high of $99.5M in FY20, or 63% of the levy increase—a 26.4% increase from FY19. The standard 2.5% increase in the base levy produced an increase of $58.8M, or 37% of the levy increase.

Modest Tax Rate Changes The business and residential tax rates reflect the increase in value and the City shifting as much of the tax burden onto business property as allowed by state law.
The residential rate increased by $0.02, or 0.2%, from $10.54 to $10.56. Because the residential increase in value outpaced the business increase, the residential share of the tax levy increased slightly from 39.5% to just over 40%. A significant driver of this shift was continued growth in mixed-use development, which has been predominantly residential.

The business tax rate decreased by $0.08 (-0.3%), from $25.00 to $24.92, continuing a trend of gradual decreases from a high of $31.96 in FY13.

Although the residential percentage increase in the tax levy (8.2%) was greater than business increase (5.8%), businesses continue to pay the larger share of the overall levy (60%) while making up a smaller share of the overall taxable value of city property (34.3%) due to classification.

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