Why Boston Property Taxes Rise When Office Values Fall

Why are Boston homeowners paying higher property taxes because downtown office buildings lost value?

Boston funds more than 70% of its budget with property taxes, and state law caps how much of that bill can be shifted onto commercial property. Since the pandemic, downtown office values have dropped while home values kept climbing, so the share of the levy that homeowners cover has hit its highest point in at least four decades. The result in January 2026 was a 13% increase for the average single-family home, about $780 a year, and a state Senate vote that shut down the city's plan to soften it. If you are buying in Boston, the tax bill on a listing is a moving target, and you should underwrite it that way.

By Katherine Kranenburg | November 7, 2026

I filmed this one because the question keeps coming up in my DMs, usually phrased somewhere between confused and annoyed. A downtown office tower loses a chunk of its value, and somehow the bill for a condo in the South End goes up. That feels backwards. It is also exactly how Massachusetts property tax works, and once you understand the mechanism you can plan around it instead of being surprised by it.

The short version is in the video. The long version, with the numbers, is below.

How a falling office market lands on your tax bill

Boston does not tax you on what your home is worth. It decides how much total money it needs from property taxes, called the levy, and then divides that levy across every property in the city based on assessed value. Proposition 2 limits how fast the levy can grow, and the Boston Municipal Research Bureau reported that the levy limit rose 4.8% for fiscal 2026, the slowest increase in over a decade. Slow growth is still growth, and someone has to pay it.

Here is the part most people miss. Massachusetts lets cities shift extra weight onto commercial, industrial and personal property so that businesses pay a bigger share than their values alone would justify. Boston has used that lever for years. But the shift is capped by state law at 175% of what residential would otherwise carry, and the City Council voted unanimously in December 2025 to keep it at that maximum, according to WBUR.

When commercial values rise, that cap is no problem. When they fall, the math flips. The Research Bureau's figures show commercial assessed value dropped from $61.18 billion to $58.80 billion between fiscal 2025 and fiscal 2026, a 3.9% decline and the second straight year of losses, while residential value grew 2.7% to $158.20 billion. Business property was 30.8% of the city's taxable value and still paid 53.9% of the levy. Residential was 69.2% of value and paid 46.1%, which the Bureau called the highest residential share and lowest business share in at least four decades.

So the city is already leaning on commercial property as hard as the law allows. There is no more room to shift. Every dollar of levy growth that commercial values can no longer absorb flows to homeowners, and the tax rate for residential property rose 7.1% to $12.40 per $1,000 of value for fiscal 2026, per the same report. Office landlords, meanwhile, saw bills on high-end buildings drop by an average of $210,000, a 4.4% decrease, according to WBUR and Axios Boston.

That is the whole answer to the question in the video. Nobody decided homeowners should subsidize empty offices. The formula did it, because the formula was built for a world where downtown kept getting more valuable every year.

What happened to the fix, and why it matters for 2027

Mayor Michelle Wu's answer was a home rule petition asking the Legislature to let Boston temporarily raise that 175% cap to 181% for three years, then step back down. WBUR reported the city's estimate that the change would have held the January 2026 residential increase to about 9% instead of 13%. The City Council backed it, the House passed it, and the Senate did not take it up, so the Council set the rates it could legally set.

Then on January 15, 2026, Senator Mike Rush of West Roxbury offered the plan as an amendment on the Senate floor, and it was rejected 33 to 5. Senator William Brownsberger argued that if Boston got the carve-out, every city and town with a similar tax structure would try to do the same thing, and that it was not good for the Commonwealth in the long run. What the Senate approved instead was a statewide option for cities and towns to offer tax credits to homeowners in years when property taxes jump by more than 10%.

Why does a vote from last January matter for a buyer in November 2026? Because the assessment cycle is already turning. Fiscal 2026 bills were based on values as of January 1, 2025. The next round, fiscal 2027, will reflect values as of January 1, 2026, and the Research Bureau warned that shrinking new growth, especially on the commercial side, where new growth fell 26.1% in one year, will constrain the city's property tax revenue more than in recent years. The City Council typically sets the new rates in December, and the bills that reflect them arrive in January. Nothing in the public record so far suggests the commercial side has turned the corner, and the only structural relief on the table was voted down.

I would love to tell you this is a one-year blip. The honest read is that the levy still has to grow, commercial values are still soft, and the cap is still the cap. Council President Ruthzee Louijeune said it plainly in December: the city is coming very close to a point where residents shoulder 50% of total property taxes collected.

If you are weighing a condo in the city against a house in Newton or Brookline and the tax line keeps nagging at you, that is a conversation worth having before you write an offer, not after. I run these numbers with relocation buyers every week. Reach out and we will walk through the real carrying cost of the homes on your shortlist, including where the tax bill is likely headed.

What this means if you are buying in Boston

First, stop treating the tax figure on a listing as a fixed cost. It is last year's bill, calculated on an assessment from the year before that. Boston's residential rate moved 7.1% in a single cycle, and WBUR noted that because the last two years' increases overlap in the January bills, residents faced a 26% jump in the January bill before settling into the 13% annual pace. Your lender's escrow estimate will not catch that. You should.

Second, the residential exemption is doing a lot of quiet work. Boston adopted the maximum 35% exemption for owner-occupied primary residences, and Councilor Brian Worrell put the average savings at $4,354 on a fiscal 2026 bill, per WBUR. If you are buying a primary residence, that exemption is the single biggest lever you control, and I wrote a full walkthrough of how the Boston residential exemption works and how to claim it. If you are buying a second home or an investment condo, you do not get it, and your effective rate is meaningfully higher than your neighbor's.

Third, the tax trend is one more reason the Newton versus Boston cost comparison is not as lopsided as the sticker prices suggest. Suburban towns have their own levies and their own pressures, and a bigger house on a bigger lot is not automatically cheaper to carry. But a town without a large downtown office base does not have Boston's particular exposure, where a weak commercial market mechanically pushes the bill toward homeowners. That is worth modeling town by town rather than assuming.

Fourth, do not read this as a reason to avoid the city. Boston's housing values rose while office values fell, which is the reason the burden shifted in the first place. Demand for homes in Back Bay, the South End and the Seaport is the strong side of this story. The buildings losing value are the ones nobody wants to work in five days a week, and the city is actively trying to turn parts of the office district into a residential neighborhood, which over time rebuilds the tax base from the other direction.

What I tell clients is simple. Budget for the tax bill to rise faster than inflation for the next couple of cycles, claim every exemption you qualify for, and pick the home you want to live in. A property tax increase of $780 a year is real money. It is also a rounding error next to buying the wrong house in the wrong neighborhood because a line item spooked you.

Frequently asked questions

Why did Boston property taxes go up so much in 2026?

Commercial values fell while residential values rose, and state law caps the shift onto commercial property at 175% of the residential share. Boston was already at that cap, so levy growth landed on homeowners. The average single-family increase was about 13%, or roughly $780 a year, according to WBUR and Axios Boston.

What was Mayor Wu's tax shift proposal?

A temporary increase of the commercial shift cap from 175% to 181% for three years, which the city said would have held the residential increase to about 9%. The Massachusetts Senate rejected it 33 to 5 on January 15, 2026.

How much of Boston's property tax levy do homeowners pay?

For fiscal 2026, residential property was 69.2% of taxable value and paid 46.1% of the levy, the highest residential share in at least four decades, per the Boston Municipal Research Bureau. Business property was 30.8% of value and paid 53.9% of the levy.

Does the Boston residential exemption still help?

Yes. The city adopted the maximum 35% exemption for owner-occupied primary residences, which the City Council said saves the average homeowner about $4,354. You must live in the home as your primary residence and file for it.

Will Boston property taxes go up again in 2027?

No one has published the fiscal 2027 rates yet. The levy will grow under Proposition 2 , commercial new growth fell 26.1% in the last cycle, and the state rejected the cap change, so the structural pressure on residential bills has not gone away. The City Council usually sets rates in December.

If you want to know what's changing across Greater Boston before everyone else does, you're in the right place. Share this with a friend, and come find me on YouTube and Instagram at Move Me To Boston for the next one.

About Katherine Kranenburg
Katherine Kranenburg, REALTOR , a top-producing Greater Boston REALTOR with Real Brokerage and nearly two decades of experience as a Greater Boston real estate agent. Featured in The Boston Globe and a Boston Common Magazine Dynamic Women honoree, with 5-star Google reviews, Katherine Kranenburg serves relocation buyers, downsizers and move-up buyers across Boston, Newton, Wellesley, Back Bay, Brookline, Newton Centre, Waban, and Newton Highlands.