Proposed FY25 Override

Proposition 2 ½ is a Massachusetts state law that imposes limitations on property tax increases by local governments. Here’s a summary of its key provisions:

1. Tax Limitation: Proposition 2 ½ limits the annual increase in a municipality's property tax levy to 2.5% of the assessed value of all taxable property within the municipality, plus an additional amount for new growth. This effectively caps the amount of revenue that municipalities can collect from property taxes.
2. Override: Municipalities can vote to exceed the 2.5% limit through a voter-approved override. Overrides can be either general overrides, which allow the municipality to raise property taxes above the limit for any purpose, or specific overrides, which are earmarked for specific purposes such as funding for schools or public safety.
3. Underride: In some cases, municipalities may choose to reduce their property tax levy below the 2.5% limit through an underride, which requires voter approval.
4. Exemptions: Certain types of property are exempt from the limitations of Proposition 2 1/2, such as property owned by the government, religious organizations, and charitable organizations.

Proposition 2 ½ was intended to provide property tax relief to Massachusetts residents and to impose fiscal discipline on local governments. However, it has also led to challenges for municipalities in funding essential services and infrastructure maintenance, particularly in times of economic downturn or when the costs of services exceed the allowed tax increases. As a result, Proposition 2 ½ remains a topic of debate and discussion among policymakers and residents in Massachusetts.

Frequently Asked Questions

View our Proposition 2 ½ Override FAQs.