“Proposition 2 1/2" is the title given to an initiative petition adopted by Massachusetts voters in 1980. The main features of Proposition 2 1/2 are related to the total amount of property taxes that a city or town can raise each year.
The law places two limitations on the amount of property taxes to be charged to property owners:
- The property tax levy ceiling (the amount to be raised) can never exceed 2 1/2 percent of the full cash value of all taxable property in the municipality and the tax rate can not be greater than $25.00 per $1,000.00 of valuation.
- The property tax levy limit can not be increased more than 2 1/2 percent over the prior year's levy limit, unless voters in that city or town vote to exceed ("override") the tax cap.
The levy limit provisions of Proposition 2 1/2 affect the total amount of taxes that a city or town can raise. The law does not apply to individual tax bills. Whether or not the tax rate increases or decreases from the prior year depends upon the levy voted by the community and whether property values appreciate, depreciate or remain steady.