There can be a shift of the tax burden among the property classes. Taxable property in Massachusetts falls under one or more of the following classifications: residential, open space, commercial, industrial, and personal property. Massachusetts communities may shift some of the residential tax burdens onto the commercial, industrial, and personal properties by adopting a residential factor which creates a split tax rate.
Needham has a split tax rate, taxing commercial and industrial property at a higher rate than residential property. The split tax rate represents a $1,674 cost savings for the average residential property owner. In the fiscal year of 2021 Needham's commercial properties ticked upward slightly in total value percentage, which caused a slight increase for those properties in terms of the percentage of the total tax burden they absorbed in relation to the residential properties.
The Select Board, in consultation with the Board of Assessors, voted to set the fiscal year of 2021 shift factor at 1.75, the maximum shift available for Needham. The shift factor was 1.75 in the fiscal year 2020 as well. This means that for the fiscal year 2021, commercial, industrial, and personal property while representing less than 14% of the total taxable value, will pay just over 23% of the total taxes.
Benefits of the Two-tier Tax Rate
Since the implementation of the two-tier tax rate in 1988, the town and the residents have experienced significant benefits by shifting the tax burden to commercial property. However, because commercial properties are now a much smaller share of the town's total property value, the ability of the commercial property to shoulder the tax burden has diminished. The town has been proactive in attempting to maintain a healthy commercial tax base, which generates stable tax revenues from businesses and enhances, rather than detracts, from the quality of life for Needham residents.
The ongoing revitalization of the Town's commercial base continues, particularly after the re-zoning of the New England Business Center in 2002 and again in 2011. The former industrial park, recently christened as "Needham Crossing" is a vital component of Needham's future ability to maintain the quality of services and broaden the tax base.
Recent commitments by several business entities to develop office, hospitality and high tech facilities in the business center assure the continuation of this trend.