FREQUENTLY ASKED QUESTIONS

Proposition 2½, also known as the Massachusetts Local Property Tax Limitations Act, was passed by Massachusetts voters in 1980. The law limits the amount of money Newton can raise through property taxes by capping the annual increase of the tax levy by 2.5%. The “levy” is the amount of revenue that a community can raise through property taxes. Proposition 2½ bars a community from increasing the levy by more than 2.5% of the total value of all taxable property in that municipality. That is known as the “levy ceiling.” There are two types of overrides:

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• General override, Proposition 2½ override, or operating override are different names for the same thing–a permanent increase to property taxes that can  be used for both operating and capital expenses, such as paving roads, improving parks, or covering educational costs.

• Debt exclusion override is a temporary increase in the amount a community can levy in order to cover its annual debt service costs on borrowing. These funds are used for capital expenses such as a new or renovated school building.  When the debt (i.e. loan) for the project is paid off, the additional yearly charge to each taxpayer ends. 

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Click here for more on operating and debt exclusion overrides.