Proposition 2 1/2

Proposition 2 1/2

Proposition 2 ½ is a Massachusetts Law passed in 1980 that places limits on the amount of property taxes a community can raise each year. Proposition 2 ½ states that a city or town’s tax levy limit increases by 2.5% per year. 

The tax levy includes taxes from residential taxes (your home), commercial taxes (an office building), and personal property (equipment, infrastructure)

Proposition 2 ½ also allows the tax levy to increase by the amount of new growth, or the value of new construction or taxable property added in a given year. Additional elements to the tax levy include debt exclusions (an increase to the levy for the purposes of raising funds for debt service) and overrides (a permanent increase to the tax levy). Approval of these funds require Town Meeting and Ballot Box approval. 

Debt Exclusions 

Revenue from Debt Exclusions is derived from additional property taxes paid by all taxpayers in town. Debt Exclusions require a 2/3rds approval at Town Meeting and a majority approval at the ballot box. Taxes can only be raised for the life of the borrowing term, and are not a permanent increase to the tax levy.

How the Tax Levy is Built