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Wu files new homeowner tax relief proposal, now with potential rebates
Similar efforts from Boston Mayor Michelle Wu stalled in the State House last year.
Boston Mayor Michelle Wu filed a new tax relief proposal Monday that she says would help residents withstand significant residential property tax spikes, potentially with the help of tax rebates.
The move comes after Wu spent much of last year pushing legislation that would have shifted the city’s property tax burden onto commercial real estate in order to blunt expected tax increases for homeowners. Wu expended significant political capital, ushering the proposals through City Council and the House of Representatives twice. Along the way she even hashed out a compromise with business leaders and fiscal watchdog groups who had previously opposed the measure.
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But when new data was released about the anticipated tax increases not being as steep as previously thought, the legislation died in the Senate.
More than 70% of Boston’s budget is funded through property taxes. The COVID-19 pandemic caused residential property values to increase while harming the values of commercial properties. To make up for the difference, homeowners are facing tax spikes.
The Wu administration previously projected that residential property owners could see a 14% property tax increase year over year without the previous plan’s approval. After new property valuation data came in, that increase was expected to only be about 10.5%. A single senator, Democrat Nick Collins of Boston, then accused the administration of stoking a “campaign of fear and manipulation” before blocking a vote on the last proposal during informal sessions last month.
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Now residents have received their Fiscal Year 2025 third-quarter tax bills. The average single family home receiving a residential exemption saw increases of 10.4%. This is almost a $575 increase for the year and a 21% bill-to-bill increase, the administration said. More than 55% of all residential property owners received a bill with an annual increase of more than 9%. The administration says that only 21.5% of residential property owners would have seen such a notable increase had Wu’s previous proposal made it through the State House.
Wu says she is planning to run for reelection this year but has not formally launched her campaign. As Boston’s overall cost of living continues to increase and homeowners reckon with their higher taxes, Wu is pinning the blame squarely on those who helped torpedo last year’s proposal.
“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,” the mayor said in a statement Monday. “I urge legislators and all stakeholders that held up the passage of our negotiated compromise to look carefully at the serious impact on Boston residents and join us in delivering the balanced relief our community needs.”
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The administration even developed a tax calculator for residents to illustrate how much they potentially could have saved if Wu’s previous proposal was approved.
The specifics
The proposal filed this week seeks to set the Fiscal Year 2025 tax rate to levels that were previously agreed upon by business groups and approved by the City Council and the House of Representatives, the administration said. The goal is to adjust the final quarterly property tax bill that will be sent to residents in April. The new proposal would need to be passed by March for this to happen.
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The proposal looks to set tax classification levels for fiscal years 2026 and 2027 at previously-agreed upon levels that would put more of the burden on commercial properties. The city is seeking the authority to appropriate up to $15 million a year to support small businesses impacted by the tax shift. The administration also wants to increase the exemption for small businesses on personal property to $30,000 so that businesses “with less than that amount in personal property would not be taxed.” The number of small businesses in Boston exempt from personal property tax would increase from about 2,500 businesses to 5,000 in this scenario.
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Some of the most vocal supporters of Wu’s proposal last year were older residents, many of whom live on fixed incomes. The advocacy group Massachusetts Senior Action Council showed up at multiple City Council meetings and hearings in the State House to push for what they said was desperately needed relief.
In recent years, “dated criteria” caused the pool of eligible applicants for the 41C senior tax relief program to shrink, the administration said. The new proposal seeks to tweak the eligibility criteria and increase the amount of the exemption being offered to seniors.
Finally, the proposal would give Boston the authority to issue tax rebates to residential property owners in the event that the administration’s request to shift the tax burden onto commercial property owners is again rejected. How much money would be tapped from the city’s “rainy day” fund for these rebates, and how much each homeowner would be eligible for, would be determined by the administration and City Council at a later date.
The new proposal needs the approval of City Council before it can be sent to Beacon Hill. Wu sent a letter to councilors Monday outlining the details of the proposal. She has many allies on City Council, and last year’s proposals passed relatively easily through the chamber. Councilors are set to discuss the new proposal on Wednesday, and some are already squabbling on social media over the topic.
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