Proposition 2 ½ is the title given to an initiative petition adopted by voters in Massachusetts in 1980.
The principal features of Proposition 2 ½ are related to the total amount of property taxes which a city or town can raise each year. It contains two limitations on the amount of property taxes to be raised:
- The property tax levy ceiling (the amount raised) can never exceed 2 ½ % of the full cash value of all taxable property in the town
- A tax rate can not be higher than $25 per $1,000 of valuation
- The property tax levy limit cannot be increased more than 2 ½% over the prior levy limit unless it gets voter's approval to override the cap
The levy limit provision of Proposition 2 ½ affects the total amount of taxes to be raised by the town. It does not apply to an individual tax bills.
Whether the tax rate for a community will increase or decrease from the prior year will depend upon the levy decided upon by the community. It also depends on whether property values appreciate, depreciate or remain steady in the particular community.