Taxpayer's Guide to Prop 2 1/2

Levy Limit Primer
What is Proposition 2 1/2?
Proposition 2 ½ is the title given to an initiative petition adopted by voters in Massachusetts in 1980.

The principal features of Proposition 2 ½ are related to the total amount of property taxes which a city or town can raise each year. It contains two limitations on the amount of property taxes to be raised:

1. The property tax levy ceiling (the amount raised) can never exceed 2 ½ % of the full cash value of all taxable property in the city or town. A tax rate cannot be higher than $25.00 per $1,000 of valuation.

2. The property tax levy limit cannot be increased more than the 2 ½ % over the prior year’s levy limit unless voters approve to override the cap.

The levy limit provisions of Proposition 2 ½ affect the total amount of taxes to be raised by a city or town. It does not apply to an individual tax bill.

Whether the tax rate for a community will increase or decrease from the prior year will depend upon the levy within the community. It also depends on whether property values appreciate, depreciate or remain steady in the particular community.

Follow this link A Primer on Proposition 2 1/2  to learn the basic provisions of Proposition 2 1/2.. We focus in particular on those aspects of the law that cause the most confusion:
 
  • The ways in which Proposition 2 1/2 limits the property tax,
  • How the levy limt is calculated,
  • How an override differs from a debt exclusion or capital outlay expenditure exclusion,
  • How new growth works.