Proposition 2½

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Proposition 2½ (Mass. Gen. L. c. 59, § 21C) is a Massachusetts statute that limits property tax assessments and secondarily, automobile excise tax levies by Massachusetts municipalities. The name of the initiative refers to the 2.5% ceiling on total property tax revenues annually as well as the 2.5% limit on property tax increases. It was passed by ballot measure,[1] specifically called an initiative petition within Massachusetts state law, in 1980 and went into effect in 1982. The effort to enact the proposition was led by the anti-tax group Citizens for Limited Taxation.[2] It is similar to other tax revolt measures passed around the same time in other parts of the United States.

Real and personal property taxes[edit]

Under Proposition 2½, a municipality is subject to two property tax limits:

  1. Ceiling: The total annual property tax revenue raised by a municipality shall not exceed 2.5% of the assessed value of all taxable property contained in it.
  2. Increase limit: The annual increase of property tax cannot exceed 2.5%, plus the amount attributable to taxes that are from new real property.

These limits refer to the entire amount of the annual tax levy raised by a municipality. The property taxes are the sum of: (a) residential real property; (b) commercial real property; (c) industrial real property; and (d) business-owned personal property. In practice, it usually limits the tax bills of individual taxpayers, but only as an indirect result.

A side effect of Proposition 2½ is that municipality income will decline in real terms whenever inflation rises above 2.5%. Historically inflation has been above 2.5% for a significant majority of the years since 1980 (22 out of the 28 years to date), thus resulting in a real decline in local tax rates and local spending ability.

An exception allows the citizens of each municipality to override the 2½ restriction to address specific needs of the community thus giving the citizens direct control over their taxation.

Vehicle excise tax[edit]

The excise tax for automobiles registered in Massachusetts was also lowered by Proposition 2½. Previously, this tax was levied at a rate of $66.00 per $1,000 of car valuation (6.6%). Proposition 2½ lowered this rate to $25.00 per $1,000 of car valuation, resulting in a 2½ per cent excise tax rate,[3] but can still increase 264%, to the previous 6.6% tax rate if a Proposition 2½ operational override (see below) is approved by ballot in a community during a general (or special referendum) election.


Proposition 2½ excludes four cases from the limitation on tax levy increases:

  • "New growth": The Act allows for new growth. So, for example, when a new house is built, the tax levy may increase by the amount of taxes collected from that house.

And three types of exclusions granted by the majority those voting in a municipal referendum:

  • "Capital exclusion": Capital expenditure for the upcoming fiscal year;[4]
  • "Debt exclusion": For pre-1980 municipal debt or new debt issued for a designated purpose (e.g. bonds issued for a multi-year capital expense);[5] or
  • Water/sewer debt: For certain water and sewer system debt.[6]

Overrides and underrides[edit]

Municipalities may exceed or reduce the limits with the prior approval of the majority those voting in a municipal referendum to:

  • "Operational override": Override the increase limit.[7]
  • "Underride": The levy limit is reduced. Such a vote can be started by the Massachusetts initiative petition procedure, or the municipal legislature.[8]

The proposition originally required a two-thirds majority for passage of overrides, but the state legislature changed this to a simple majority in 1981.[9]

As of January 2009, municipalities had requested, via referendum, 4,449 overrides of Proposition 2½, of which 1,798 passed; 16 underrides were requested, of which 9 passed.[10]

See also[edit]

  • Proposition 13, the California tax limitation law that inspired the passage of Proposition 2½.[1]


  1. ^ a b Frum, David (2000). How We Got Here: The '70s. New York, New York: Basic Books. p. 325. ISBN 0-465-04195-7. 
  2. ^ Denison, Dave (Summer 1996). "The Odd Proposition". Commonwealth Magazine. 
  3. ^ Tompkins, Susanne. "Proposition 2½". McCormack Institute. 
  4. ^ Mass. Gen. Laws Ch. 59 § 21C(i½), via
  5. ^ Mass. Gen. Laws Ch. 59 § 21C(j,k), via
  6. ^ Mass. Gen. Laws Ch. 59 § 21C(n), via
  7. ^ Mass. Gen. Laws Ch. 59 § 21C(g), via
  8. ^ Mass. Gen. Laws Ch. 59 § 21C(h), via
  9. ^ Zimmerman, Joseph F. (1995). State-local Relations: A Partnership Approach. ABC-CLIO. ISBN 978-0-275-95235-8. 
  10. ^ "Proposition 2 1/2". Massachusetts Department of Revenue. [dead link]

External links[edit]