Quarterly Taxes Explained

Many taxpayers owning properties in Massachusetts’ cities and towns that bill real estate taxes quarterly find the process confusing. The confusion often results in miscalculations of the extent of property tax increases. A brief explanation follows.

Fiscal years for Massachusetts’ municipalities run from July 1st to June 30th. The 1st and 2nd quarter tax installments are each based on one-quarter of the prior fiscal year’s total taxes. These bills are referred to as “estimated bills” or “preliminary bills”. Some towns may chose to increase estimated bills if they anticipate a large tax increase. With the issuance of 3rd quarter bills in January, new assessed valuations and tax rates appear. Also stated is the newly computed property tax for the year. Essentially, the total tax for a given fiscal year is known midway through that fiscal year. Estimated payments made in the 1st two quarters are subtracted from the total computed tax and the remainder is billed over the 3rd and 4th quarter installments. It is important to note that tax increases for the year are generally born on the final 2 installments. Tax comparisons should be made by comparing the total fiscal year’s taxes, not by comparing quarter-to-quarter payment amounts.