Residents of Boston are preparing for a significant property tax increase at the start of the new year, adding financial pressure in one of the country’s costliest housing markets. City officials confirmed this week that residential property taxes will rise by 13% beginning in January, amounting to about $780 in additional costs for the average homeowner.
This tax increase comes as Boston’s real estate prices remain among the highest in the country. Realtor.com’s October 2025 report shows the median home price in Boston is just under $800,000, making it the fifth most expensive city among the 50 largest metros and the priciest market outside California. For many homeowners, the new tax hike adds to already high costs.
A Double-Sized Tax Bill to Start the Year
Mayor Michelle Wu addressed the change during a Tuesday press briefing, warning that the January bill will feel disproportionately large. Because the new tax rate will be applied retroactively to the prior quarter, homeowners will face what amounts to a two-quarter adjustment at once.
“With a 13% annual increase, the January bill will be felt as a 26% increase over the last quarter’s bill,” Wu explained. “That’s a lot of money to come up with suddenly, especially for seniors, residents on fixed incomes, and anyone adjusting to rising heating and energy costs as winter ramps up.”
City officials note that the increase will not be officially finalized until the Massachusetts Department of Revenue signs off on Boston’s submitted property valuations. However, the jump is all but expected, driven by trends that have been building over the past several years.
Commercial Values Slide, Shifting the Burden to Residents
Wu attributed the steep increase to a sharp decline in commercial property values, a trend that began during the COVID-19 pandemic and has persisted as office demand and downtown economic activity continue to lag pre-2020 levels. This year alone, commercial property values in Boston dropped by 6%, while residential values increased by 2%.
As commercial properties lose value, and thus contribute less tax revenue, the city’s tax burden shifts toward homeowners. Boston relies heavily on property taxes to fund city services, with more than 70% of its $4.6 billion operating budget tied to property tax income. Historically, commercial buildings have supplied the majority of that revenue, but falling valuations mean the difference must be made up elsewhere.
Ironically, while homeowners face higher bills, commercial taxpayers will see relief. According to Wu, commercial real estate owners are expected to receive a 4.4% decrease in their tax bills, representing average savings of about $210,000.
Legislative Efforts Stall, Leaving Limited Options
The mayor’s office has attempted multiple times to address the imbalance through legislation that would allow Boston to set higher tax rates for commercial properties beyond the limits outlined in state law. Such a change would prevent the burden from shifting dramatically toward residential taxpayers.
Last year, Wu proposed a bill that passed both the Boston City Council and the Massachusetts House of Representatives. However, the measure stalled in the state Senate and never reached the governor’s desk. She later revised the proposal to establish a 9% annual cap on residential tax increases, another attempt that ultimately fell short in the Senate.
The latest version of Wu’s plan has once again passed the City Council, but is still awaiting action from state lawmakers, who are currently on break until the new year. In a letter circulated to organizations including the Boston Municipal Research Bureau, the Greater Boston Chamber of Commerce, the Massachusetts Taxpayer Foundation, and NAIOP Massachusetts, Wu urged immediate passage.
“With taxes for the average single-family home projected to be up 34% from 2023 to 2026, Boston residents are facing serious financial hardship,” Wu wrote. “Allowing continued double-digit residential property tax increases threatens to weaken our economic prospects and our ability to remain a talent hub.”
How the Increase May Influence Boston’s Housing Market
As homeowners brace for higher expenses, many are wondering how the tax change will influence Boston’s real estate market heading into 2026. Analysts note that while this specific tax increase alone may not spur immediate major shifts in buyer behavior, sustained or further rising housing costs, now exacerbated by higher taxes, could dampen demand, slow price growth, or prompt households to reconsider moves within or into the city over time.
Local real estate professionals report that clients are aware of the tax adjustments, but the issue has not yet become a primary decision-making factor. “Clients are aware of the recent increases in property taxes, and it does come up in conversations, but it’s one of several factors they consider when making a move, not the deciding one,” said Elaine Dolley, a Boston-based agent with Douglas Elliman.
Dolley added that despite the higher tax burden, demand for housing in the city remains strong. “People continue to see long-term value in Boston’s real estate, its amenities, and its stability,” she noted. “The tax situation is something buyers are watching closely, but it’s not deterring interest in the market.”
A Financial Crossroads Heading Into 2026
The upcoming property tax hike highlights the broader financial challenges facing Boston as it navigates shifting economic tides. Lower commercial valuations, ongoing federal cuts, and rising municipal expenses have left the city with fewer revenue-generating options, pushing more of the load onto homeowners.
To many Boston residents, the January bills will serve as a stark reminder of those pressures. With state legislators not set to reconvene until next year, homeowners may need to brace for elevated taxes in the near term, even as policymakers search for long-term solutions to stabilize the city’s fiscal future.
