The Massachusetts Fiscal Alliance is highlighting a new analysis from the Tax Foundation confirming that Proposition 2 ½ continues to serve as one of the Commonwealth’s most important taxpayer protections, especially at a time when state leaders are allowing local aid to erode despite record-breaking revenues.

The report shows that Massachusetts remains one of the highest-taxed states in the nation, with the 6th highest property tax collections per capita and the 10th highest property taxes as a share of income. Proposition 2 ½ has kept those burdens from rising even faster over the past four decades.

One of the most striking points from the report concerns state aid to municipalities. Citing U.S. Census Bureau data and a 2025 study by the Massachusetts Municipal Association, the Tax Foundation notes that cities and towns nationwide receive about 31 percent of their revenue from state aid, while Massachusetts municipalities receive just 26 percent. Even more concerning, unrestricted local aid has declined by 25 percent since 2010, with rural communities hit the hardest, despite the fact that state revenues are setting new records and exceeding benchmarks.

“The Tax Foundation is the gold standard for U.S. and state based tax analysis and we are very pleased to see them take such an interest in Massachusetts and showcasing the tremendous benefit taxpayers have in Proposition 2 ½. Their report lays out the truth in black and white. The Tax Foundation makes it clear that cities and towns nationwide receive about 31 percent of their revenue from state aid, but Massachusetts leaders are only sending 26 percent back to municipalities. Any discussion to weaken or repeal Proposition 2 ½ should end right there,” said Paul Diego Craney, Executive Director of the Massachusetts Fiscal Alliance.

The Tax Foundation also warns against recent calls to weaken or repeal Proposition 2 ½. Despite the limit, Massachusetts property taxes remain among the highest in the country and without it, the report shows tax bills would have risen “significantly more” over the past 40 years. Proposition 2 ½’s levy limit, combined with voter-approved overrides when necessary, has provided a stable and predictable framework that protects taxpayers without preventing local governments from raising revenue even more when they make a compelling case.

The study further notes that Massachusetts now imposes a top income tax rate of 9 percent, one of the highest in the region, following the 2022 surtax. State collections for FY25 were 7.1 percent higher than the previous year and exceeded benchmarks by 5.1 percent, driven by the surtax and higher capital gains, sales, and other tax receipts.

Against that backdrop, the Governor has proposed legislation allowing municipalities to raise meals taxes, hotel taxes, and auto excise taxes, despite the report’s clear evidence that the state’s real problem is not a lack of revenue, but a lack of commitment to funding core obligations like municipal aid.

“Beacon Hill should stop blaming Proposition 2 ½ for challenges that are entirely of their own making. The state is awash in revenue, yet cities and towns continue to fall further behind. That’s a priorities problem, not a revenue problem. If elected officials are able to weaken or repeal Proposition 2 ½, they will see a taxpayer revolution like they cannot ever imagine,” said Craney.

MassFiscal urges lawmakers to reject any proposal that weakens Proposition 2 ½ and instead restore reliable, predictable local aid. The organization will continue to advocate for policies that strengthen municipal finances and protect taxpayers from further burdens.

For full details, the Tax Foundation report is available here.