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Massachusetts Senate Proposes Tax Suspension for Multihousing Construction

Efforts underway at a multifamily housing construction site in Boston as state proposes tax suspension.

News Summary

Senate Democrats in Massachusetts are proposing a suspension of the sales tax on construction materials for multifamily housing to increase housing production. The initiative, led by Senator Julian Cyr, is aimed at alleviating the ongoing housing crisis by supporting developers financially. Mayor Michelle Wu is advocating for a tax shift to burden businesses more heavily, potentially leading to significant property tax increases for residents. As discussions unfold, the economic implications for both residents and businesses in Boston are significant.

Boston – Senate Democrats in Massachusetts are exploring a proposal to suspend the sales tax on construction materials specifically used for multifamily housing. This initiative aims to stimulate housing production in the state while the government forgoes certain revenues associated with these taxes. The forthcoming proposal is set to be introduced by Senator Julian Cyr, co-chair of the Joint Committee on Housing, as confirmed by Senate President Karen Spilka. The proposal is being developed in coordination with the Healey administration, indicating a strong government initiative to address the housing crisis within the state.

The suggestion received positive feedback at a Greater Boston Chamber of Commerce event held on May 11, 2025. The initiative is seen as a potential catalyst for increasing the supply of multifamily housing, thus attempting to alleviate Massachusetts’s ongoing housing challenges. Supporters argue that easing the financial burden on developers by suspending the sales tax could enhance the feasibility of construction projects, ultimately benefiting those seeking affordable housing options.

In Boston, Mayor Michelle Wu is advocating for a shift in the city’s tax burden to be placed more heavily on businesses in response to an anticipated property tax increase for residents. As it stands, homeowners could face a staggering 28% increase on their property taxes if legislative actions do not materialize by late November. Wu initially projected a potential 33% increase in residential property taxes come January, which would cause significant financial strain for many families, particularly seniors and those on fixed incomes.

Currently, commercial properties contribute about 60% of Boston’s overall property tax revenue. Support for Wu’s proposed tax shift plan has emerged from the House; however, the proposal requires additional approval from the Senate and Governor Maura Healey. The ramifications of this increased tax burden could mean that an average single-family home valued at $838,000 might see an added tax increase of approximately $273, should Wu’s plan proceed as envisioned.

Despite the support, resistance to the mayor’s approach is evident, particularly from the business community. Critics argue that rather than shifting taxes, the city should focus on budget cuts and spending limits. The fears expressed include that outsourced budget cuts might lead to substantial layoffs and reductions in essential services. The Boston Municipal Research Bureau has also suggested that city officials should strive for more efficient service delivery, advocating for modest budget adjustments rather than a tax realignment.

In response to the potential financial strain on small businesses due to the tax changes, Wu has committed to issuing an executive order aimed at aiding those businesses. This plan includes a request for $15 million annually over three years to support local small enterprises and mitigate negative impacts caused by the proposed adjustments. However, some, like Councilor Ed Flynn, recommend these funds be directed towards immediate assistance for residents rather than changing the city’s tax structure.

As the city grapples with these potential changes, the average property tax increase for residents has been reported at 10.4% for January. However, specific increases can vary significantly between homeowners, leaving many concerned about their ability to manage rising property taxes, particularly among long-time residents and seniors. With financial pressures mounting, the stakes remain high for both policy-makers and the communities they serve, as these tax implications could have lasting effects on the economic landscape of Boston.