Boston City Tax: Property, Vehicle, and Local Taxes
Understand the taxes you pay directly to the City of Boston. This guide clarifies how your local tax obligations are calculated, paid, and potentially reduced.
The primary direct taxes impacting Boston residents are administered at the city level, focusing on property and motor vehicles. Other taxes, such as those on personal income and sales of goods, are managed by the state of Massachusetts, creating a two-tiered tax structure for those living in the city.
Boston’s Lack of a City Income Tax
A common question for residents is whether the city levies its own income tax. Boston does not have a city-level income tax, which simplifies tax compliance for residents as they only need to navigate the state’s system. The state imposes a flat tax rate of 5.0% on most classes of income. For high earners, there is an additional 4% surtax on annual income that exceeds $1 million.
Understanding Boston Property Tax
The property tax is a primary source of revenue for Boston and is based on the property’s assessed value multiplied by the relevant tax rate. The city’s Assessing Department assesses all property at its full and fair cash value as of January 1st each year. Boston applies different tax rates to residential and commercial properties, a system known as classification, which shifts a larger portion of the tax burden to businesses.
In addition to the base property tax is the Community Preservation Act (CPA) surcharge. This 1% surcharge is applied to annual property tax bills after a $100,000 exemption from the property’s assessed value. The funds are used for affordable housing, historic preservation, and open space projects.
Boston offers several tax exemption programs to alleviate the tax burden. The Residential Exemption is available to property owners who occupy their home as their principal residence. This program reduces a homeowner’s tax bill by excluding a portion of the property’s value from taxation, saving a qualified homeowner up to $3,984.21 for Fiscal Year 2025.
The city also provides exemptions for other specific groups. Seniors may qualify for relief by meeting certain age, ownership, residency, and income requirements. Similar programs exist for legally blind individuals and veterans with service-connected disabilities. These exemptions require an annual application.
Paying Your Boston Property Tax Bill
Boston operates on a quarterly payment schedule for property taxes with due dates of August 1, November 1, February 1, and May 1. The first two payments are preliminary estimates, each based on 25% of the previous year’s total tax. The actual tax bill, reflecting the new assessed value and tax rate, is mailed in late December for the final two payments.
Payments can be made online using a credit card, debit card, or an electronic check. While electronic checks are free, using a debit or credit card incurs a 2.75% service charge. Taxpayers can also mail a check with the payment coupon from their bill. In-person payments by check or money order are accepted at the Tax Collection office at Boston City Hall.
The Boston Motor Vehicle Excise Tax
The motor vehicle excise is an annual tax for registering a vehicle in Massachusetts. This tax is billed by the city where the vehicle is garaged and is separate from property tax. It applies to registered vehicles such as cars, trucks, and motorcycles.
The tax is calculated at a rate of $25 per $1,000 of a vehicle’s value, which is determined by the state based on the manufacturer’s suggested retail price (MSRP) in its year of manufacture. A depreciation schedule is applied to the MSRP:
- Year of manufacture: 90% of MSRP
- Second year: 60% of MSRP
- Third year: 40% of MSRP
- Fourth year: 25% of MSRP
- Fifth and subsequent years: 10% of MSRP
Bills for the motor vehicle excise are issued annually, and payment is due within 30 days of the issue date. If a vehicle is sold, traded, or moved out of Massachusetts during the year, the owner may be eligible for an abatement, or a proportional reduction of the tax. To receive an abatement, the owner must file an application with the Assessing Department and provide documentation, such as a bill of sale and a plate cancellation receipt.
Other Local Taxes in Boston
Boston residents and visitors also encounter local taxes collected at the point of sale. The city has a local option meals tax, adding a 0.75% charge to restaurant meals. This is on top of the 6.25% state sales tax, bringing the total tax on dining out in Boston to 7%.
A similar structure applies to lodging, where Boston imposes a local option room occupancy tax of 6.5% on hotel stays and short-term rentals. This is in addition to the state’s 5.7% room occupancy excise and a 2.75% fee for convention center funding.