The bill amends Section 44-5-2 of the General Laws regarding the levy and assessment of local taxes by introducing new provisions that allow cities and towns to exceed the maximum tax levy under specific conditions. Effective for tax assessments dated on or after December 31, 2025, the bill permits taxes levied on new housing units added to the municipal tax base during a fiscal year to exceed the maximum levy. This provision applies to newly constructed residential properties, including single-family homes, two-family homes, single-family attached structures, multi-family dwellings, mixed-use developments where residential units constitute at least fifty percent (50%) of the building's total square footage, and existing buildings converted into residential housing units under adaptive reuse, provided they meet applicable zoning and building code requirements and increase the municipality's total housing stock.

To qualify, a city or town must have issued over ten (10) certificates of occupancy for new housing units during the fiscal year in which the exemption is sought. Additionally, at least ten percent (10%) of the units must be designated as low- or moderate-income housing as defined in 45-53-3 and 42-128-8.1. The units must be taxed using the same valuation methods and rates as similar units in the respective city or town. The taxes levied on these qualifying new housing units may only exceed the maximum levy for the fiscal year in which the certificate of occupancy is issued and for two (2) fiscal years thereafter, with the municipality phasing in the full taxes for these units into the maximum levy by the fourth fiscal year following the issuance of the certificate of occupancy.

The bill does not alter the existing structure of tax levy caps, which gradually decrease from 5.5% in fiscal year 2007 to 4% in fiscal year 2013 and beyond. It also maintains the conditions under which a city or town may exceed these caps, including losses in non-property tax revenues, emergency situations, and substantial growth in the tax base due to new construction. Any levy exceeding the specified percentage increase must be approved by a significant majority of the governing body or the electorate in a financial town meeting.

Statutes affected:
5793: 44-5-2
5793  SUB A: 44-5-2