Boston Warns of a 13% Property Tax Spike — And Renews a Heated Debate on Who Should Carry the Tax Burden

Boston is staring down yet another significant residential property tax increase — and Mayor Michelle Wu is renewing her push for a controversial tax reform that has already stalled twice at the State House.

This week, Wu warned that the average single-family homeowner in Boston is projected to see a 13% spike in property taxes beginning in January, driven by shifts in both residential and commercial property values.

Here’s what’s happening, why this is becoming such a major debate on Beacon Hill, and why residents across Massachusetts should care — even if they don’t live in Boston.

Why Taxes Are Spiking Again

Boston is unusually dependent on property taxes, which fund about 70% of the city’s budget. Since the pandemic, a major imbalance has taken shape:

• Commercial property values have fallen, largely due to high office vacancy rates.

• Residential property values have risen, increasing the share that homeowners carry.

  
  

To compensate for declining commercial revenue, Boston’s residential property owners have been hit with sharp tax increases for multiple years. Last year alone, the average homeowner saw a 10.4% increase, and Wu says the city is now entering its eighth straight year of increases over 5% — something she calls “unsustainable” and “avoidable.”

For 2026:

• Residential values are projected to increase 2%

• Commercial values are projected to decline 6%

• This imbalance leads directly to the 13% residential tax spike Wu is warning about

These aren’t hypothetical numbers — they come from a letter the mayor sent this week to business groups and fiscal watchdog organizations.

Wu’s Proposal: Shift More of the Burden Back to Commercial Properties

Wu is asking the Legislature to approve a change to Boston’s “very strict and rigid” tax formula. Her goal:

Decrease the tax break commercial properties receive so that residential homeowners don’t absorb another double-digit spike.

This requires state approval because Boston cannot adjust its classification formula on its own.

But there’s a problem: This proposal has already failed twice — even after the City Council and the House approved earlier versions.

Why the Proposal Stalled Last Year

Wu says she reached a compromise with major business groups — the Municipal Research Bureau, Greater Boston Chamber of Commerce, Massachusetts Taxpayer Foundation, and NAIOP — because Senate leadership told her a deal was needed for support.

But after the state certified valuations in 2024 and projected a smaller residential tax increase (10.5% instead of 14%), Senate leaders said they had “serious concerns” about economic impacts.

Two major developments followed:

• Senate President Karen Spilka declined to bring it to the floor.

• Sen. Nick Collins blocked action entirely, accusing the Wu administration of negotiating with “false information” and stoking a “campaign of fear and manipulation.”

  
  

Wu disputes this, saying the final valuations fell “within the range of estimates” presented throughout the process — and that lawmakers backed out of a deal once the numbers looked “not so bad,” even though “we know now that wasn’t true.”

How Business Groups Are Responding Now

The business groups Wu wrote to are reviewing her new data, but there’s clear tension:

• NAIOP Massachusetts says increasing the commercial tax burden “punishes the business sector” and makes it harder to incentivize new investment. They argue Boston should explore other revenue sources and reduce anti-growth policies.

• The Municipal Research Bureau says Boston is facing “challenging circumstances” and is watching the upcoming tax classification hearing and the Department of Revenue’s final certification closely.

  
  

Two of the groups did not respond to requests for comment.

Boston’s Broader Fiscal Approach

Wu also notified the City Council that Boston is tightening spending because of “ongoing economic uncertainty.”

She’s asking department heads to propose FY2027 budgets that are 2% below current levels. She reiterated that housing affordability remains the most urgent challenge, noting ongoing efforts to convert under-utilized office space into more than 1,000 new housing units.

Her overarching message:

Residents should not be subsidizing commercial tax bills — especially when rising housing costs remain the city’s biggest threat to competitiveness.

Why This Matters Outside Boston

Even if you’re in Avon, Stoughton, Quincy, Bridgewater, or anywhere in Massachusetts — the implications are significant:

• If Boston receives state approval for a tax-shift, it opens the door for other municipalities to request similar relief when facing commercial-value declines.

• If the Legislature rejects it again, Boston and other towns may need to consider alternative revenue sources or cuts.

• This debate will likely influence statewide tax policy discussions, especially as commercial vacancy trends affect budgets beyond Boston.

  
  

Boston often sets the tone for statewide policy conversations — and with a projected 13% hike hitting homeowners, the pressure to act is intensifying.

The Bottom Line

This isn’t just another Boston budget story. It’s a high-stakes debate about how cities sustain themselves when commercial markets shift — and who should carry the tax burden when they do.

As the business community, state lawmakers, and the mayor square off once again, Massachusetts residents should keep a close eye on where this lands.

This fight won’t stay in Boston. If the proposal moves forward — or if it collapses for a third time — it will shape tax conversations across the state in 2026 and beyond.