“How come my property taxes went up by more than 2 ½ percent?”
It’s a question heard across Plymouth – and statewide – every time bills are sent out. (The next quarterly payment is due on May 1.) The answer, as you might expect, is complicated.
First, Massachusetts’s 45-year-old Proposition 2 ½ law does not limit the increase in property taxes that individual homeowners must pay. Instead, it limits the increase in total taxes that a city or town can levy each year. That increase is called the levy limit.
Lynne Barrett, Plymouth’s director of finance, explained that it all starts at the annual spring Town Meeting. Elected members determine how big the tax levy should be over the course of the fiscal year, which begins July 1 and ends June 30.
The levy covers the annual budget, plus capital expenses, and reserve funds.
Last spring’s Town Meeting decided that from fiscal year 2024 to fiscal year 2025 (the current fiscal year), the levy should increase from $215 million to $230 million, Barrett said, or by 6.89 percent.
In 2025, the levy limit – the amount that the levy is allowed to go up by – is $5.375 million, or 2.5 percent of $215 million, the 2024 fiscal year amount.
So how is that the town increased its total property taxes by 6.89 percent? The answer is that the levy limit does not include taxes on new development. And in Plymouth, that’s a significant amount every year.
“Plymouth keeps growing and it’s growing at a much more rapid rate than many other communities in Massachusetts,” Barrett said.
Any new development, such as a house, but also an addition or a renovation, is added to the levy limit. That means it can go up by more than 2.5 percent, Barrett said, because the 2.5 percent figure only covers existing properties. Last year, new growth accounted for more than $4 million in additional property taxes, she said.
Are your eyes glazing over yet? Take a deep breath, splash cold water on your face, and continue reading.
There is another concept in Proposition 2 ½ called the levy ceiling. If the levy limit is how much taxes townwide can go up in one year, the levy ceiling is the maximum that the town can assess in taxes – 2.5 percent of the total value of property in Plymouth. The ceiling is higher than the amount of taxes that are levied. This year, Barrett said, the levy ceiling is $232 million, but only $230 million was raised in property taxes.
How does all this affect taxes for individual property owners?
It may be helpful to keep this formula in mind: the tax levy equals the tax rate multiplied by the total value of property. Or, in the case of an individual homeowner, the property tax equals the tax rate times the value of the home.
To figure out the tax rate it needs to charge each year, the town divides the tax levy by the total value of property in town. In fiscal year 2025, the tax rate is $12.69 per $1,000, lower than last year, when it was $12.87 per $1,000.
If that’s the case, then why have individual homeowners’ bills gone up, some of them by a lot?
The answer, largely, is that home values have increased.
To assess individual homeowners’ taxes, the town begins by assessing property values.
From 2024 to 2025, Barrett said, the assessed value of the average single-family home rose from $548,000 to $586,000, an increase of $38,000 or 6.9 percent.
Assessed values are based on home sales one-and-a-half years earlier, explained Michael Hourahan, Plymouth’s director of assessing. Why one-and-a-half years? Because taxes are based on fiscal years and home sales are based on calendar years.
In fiscal year 2025 (July 2024 to June 2025), Hourahan’s office is relying on home sales from calendar year 2023 (Jan. to Dec. 2023). But it uses the assessed price for homes that sold, not the sales price (which almost always is higher).
For example, the average 2023 sale price of a single-family home was $610,000, but the average assessed price was $586,000.
To figure out the average tax bill, you would multiply the average assessed price by the tax rate, or $586,000 times $12.69 per $1,000, or .01269.
The result: the average tax bill on a single-family home went up from $7,058 to $7,437, an increase of $379, or 5.4 percent. If yours increased by more than that, it’s likely a good news/bad news situation. The good news is that the value of your home – most people’s biggest asset – increased significantly, possibly because of the desirability of your neighborhood or renovations you made. The bad news is that, well, you know what the bad news is – your taxes increased by more than the average.
There’s another reason the bills mailed out on Dec. 31 (which were due Feb. 1) jumped, Barrett explained. The first two quarterly bills of a fiscal year, due in August and November, are based on your annual tax bill from the previous year. But the next two are higher.
That’s because the first two bills are preliminary, based on 2024’s bills, Barrett said. In December, when the tax rate for the current fiscal year gets certified, an actual bill gets sent that calculates the total new value of a home times the new tax rate, minus the payments made in the previous two payments.
One other thing to remember – all property tax bills come with a 1.5 percent Community Preservation Act surcharge.
Hourahan encourages people to ask questions of his staff of seven full-time and two part-time members.
The town’s website also features a “Bill Information” page that goes into details about tax procedures and deadlines.
“The more information and the more communication we can give to people, the easier, in the long run, it makes our job,” Hourahan said.
Fred Thys can be reached at fred@plymouthindependent.org.