The Tax Illusion: Why We Deserve the Truth

The story that Cambridge officials love to tell is that our tax rates are low. But that’s an illusion.

​The City’s own FY2026 tax-rate memo—tucked inside the Oct 6 City Council packet—tells a very different story. The memo from the City Manager agenda Item #1 is HERE; the meeting discussion is found HERE. You can watch the Oct 6 meeting discussing this here: HERE.

This year’s proposed taxes are as follows:
+The residential tax bill: Condominiums 13.3%; Single-family: 10.2%; Two-family: 9.2% Three-Family: 8.5%. The rate of inflation is  2.9% so this amount is triple rate of inflation.
+The commercial tax bill: 22% tax rate increase while we have a 11.5% decrease in commercial value. This is due in part to high office vacancy rate in Kendall Square. On the other hand, if local businesses values are flat they will be hit with full 22%. On average it is 8%.

Partial Source of the Current Problem: We have over built. There is too much lab and office space available here and in Boston.

If you want to understand how the tax system of this really works, take a few minutes to read the excellent memo included in the agenda packet for this year’s tax-rate hearing. It explains how Proposition 2½ affects both residential and commercial rates, and how the City calculates the “split” between them. But reading it is only the beginning. What’s missing is a real public conversation about how these moving parts—assessments, rates, exemptions, and budget priorities—fit together, and what they mean for residents.*

Why We Need an Honest Explanation:  People who don’t understand how these pieces link together—budget, assessment, rate, exemption—can’t fully understand why their bills are what they are, or how the City decides who pays more and who pays less. We now have two weeks before the final vote. Please set aside some time to read the memo. It’s worth it.

What the Numbers Show: According to City Manager Yi-An Huang’s FY2026 tax-rate memo, Cambridge’s operating budget stands at $992.2 million, supported by a property tax levy of $678.9 million, up 8% from last year.
The residential tax rate this year is projected to rise 5%, to $6.67 per $1,000. A median single-family home, now valued at $1.84 million, will owe about $8,876 in FY2026—$821 more than last year. Condominiums rise by about $224, to $1,926.  But this is only have the story. In fact, the assessed value is the single most powerful driver of your tax bill—far more than the rate itself.

In the city assessed values of commercial properties overall have fallen 11.5%, while residential values have increased 2.6%.
Assessments: The Hidden Engine. The hot market for Cambridge properties and the recent upzoning has had a major impact. State law requires every Massachusetts city to conduct full revaluations every three years. The two years in between rely on “sales analysis”—looking at recent transactions in each neighborhood to estimate annual appreciation. Those percentages are then applied by property type: single-family, two-family, three-family, or condominium.

So when developers pay inflated prices for lots—often justified by upzoning or luxury redevelopment—those inflated sales feed directly into the algorithm that sets assessed values for nearby homes. Even if your property hasn’t changed, your assessment almost certainly has. That’s why one should challenge the City’s claims that massive upzoning will not affect neighboring values. It will, and it does.

Here Developers Win, Residents Pay:

Meanwhile, the infrastructure we all rely on—electrical, water, and sewage systems—is under growing strain. Utility bills are rising steeply, but the investors and developers driving Cambridge’s demolition-and-luxury boom aren’t being asked to shoulder those costs. The City keeps approving large new projects without requiring meaningful infrastructure contributions or even basic parking, which leaves more cars circling residential streets. Growth, we’re told, will “pay for itself.” But it never does. Instead, residents pay higher taxes, higher water and sewer bills, and higher electric costs, while congestion and noise increase.  

On February 10 the City Council approved more a massive city wide upzoning but infrastructure needs were never addressed and those who benefitted financially so much from this were never asked to pay for these increased costs. This November, the City will likely approve a massive upzoning of Mass Ave and Cambridge Street. We have no supporting infrastructure upgrades for this either, and neither investors nor developers are being asked to contribute to these costs.
A Crucial Fiscal Choice Ahead : In two weeks, the Council must decide whether to approve the full 22% commercial tax increase—or shift part of it onto homeowners. That’s not a minor technical adjustment. It’s a fundamental choice about who carries Cambridge’s fiscal weight.

If we do that, city staff have said that the residential tax increase could exceed 20%.  That’s not an academic exercise; it’s a major policy choice about who carries Cambridge’s fiscal weight.  Moving forward, residents need to weigh in much more strongly on these questions. Every year at this time, the bill for all the City’s programs comes due. Some councillors continue to push for expanded services without fully acknowledging that someone—us—has to pay for them.

So as campaign season unfolds, ask candidates where they stand on fiscal planning. Ask whether they believe in moderating budget growth, or if they think residents should absorb ever-higher costs. It’s a question that rarely gets asked but always matters most.
The Bigger Picture:  Finally, let me dispel two of the most persistent myths in Cambridge that we have low taxes and that rising home values are good news for homeowners. They’re not! A higher assessment only means higher taxes. The only way it becomes real money is if you sell your home—or take out a cash-out refinance at today’s high interest rates. Also higher taxes means higher rents on one’s tenants, because these costs are always passed down.

Our homes are homes, not speculative assets. Treating them otherwise has been one of the great mistakes of our era.
It’s Time to End the Tax Illusion

It’s time for the City to stop treating the annual tax-rate hearing as a formality and start treating it as public education. Every homeowner deserves to understand exactly how assessed values, rates, and exemptions combine to determine their bill—and how the City’s policy choices shape those numbers.  Until that happens, we have to do the explaining ourselves. Read the memo.

Ask questions. Demand transparency.

Our homes—and our trust—deserve nothing less.

What can we do about this?
1.     Write to each of the current councillors as well as those running for election and ask them what they will do with respect to the increasing tax allotments. Ask each candidate how they plan to ensure tax fairness and transparency—not just affordability rhetoric.
2.     Insist that they begin work now to dramatically lower the city budget (start making plans for 15% -20% reductions as our universities and other businesses have done.
3.     Ask why it is that a city of 6.8 square miles has a budget that is nearing $1 billion a year ($992.2 million)?

                                                                     QUICK FACTS: CAMBRIDGE TAX FY 2026

•Residential tax rate: $6.67 per $1,000 of value (+5%). Residential exemption: $510,208 (≈ $3,403 savings for owner-occupants)  Typical residential tax increase: 10–15%. But assessors will also be looking at the increased value of your property due to recent sales, and that is the assessed value you will be taxed on which likely will lead to an even more dramatic rise in the amount of taxes you as a property owner will have to pay. Further possible impact: If the Council shifts part of the commercial increase to residents, homeowner taxes could rise 20%+  

• Commercial rate: $14.07 per $1,000 (+22%) Who is hit hardest by the “22%” commercial increase? The memo says hotel values “marginally increased.” When your assessed value goes up and the rate jumps 22%, your bill tends to rise more than 22% (roughly low-to-mid 20s). Retail & restaurants. The memo says they’re “slightly down in value.” That still means a noticeable bill increase, but less than 22% (often high-teens), because the lower base partially offsets the higher rate. Any commercial parcels whose FY26 assessment stayed flat or rose (individual cases): with no offset from a lower value, they feel close to the full 22% (or more if the assessment rose). Who’s hit least? Offices & labs. The memo notes “all classes of office as well as the lab sectors decreased.” With a lower FY26 assessment, the higher rate is applied to a smaller base, so bills rise well under 22%—often single-digit to low-teens depending on how much the value fell.

Why the differences in commercial rates?

Cambridge uses one commercial rate (FY26 $14.07 per $1,000, up 22% from FY25), but assessments moved in different directions by use type. Net bill change ≈ (rate change) × (new assessed value), so the assessment trend is what makes the 22% hit uneven.
This year the commercial rate is scheduled to jump a striking 22%, to $14.07.  This 22% figure isn’t applied uniformly. Office and lab spaces, already under strain from vacancies, will see moderate increases. Restaurants and small retail establishments are among those hit hardest, even as they continue to recover from years of pandemic and post-pandemic challenges. Yet our small businesses and local restaurants bear the brunt of the “commercial increase.” Those properties that lost the most commercial value will have that 22% tax-rate increase applied to a smaller base, meaning their tax bills will go up far less than 22%. By contrast, most residential properties went up in value, so the same 5% rate increase will translate into a larger percentage jump in actual bills.

*The tax you pay has two equally important parts: the assessed value and the tax rate. Those two are multiplied to calculate your bill. For owner-occupied residential property, there’s also a residential exemption—this year worth $3,403—that reduces the final amount owed. So, yes, Cambridge’s tax rates are low compared with many nearby municipalities (and with the rest of the Commonwealth), but our assessed values are not. That’s the part the City seldom emphasizes.