Every year, Cambridge adopts a balanced budget, which means the City's planned expenses must equal the revenue it expects to receive.
Like most municipalities, property taxes provide the largest share of that funding. But the City also relies on many other revenue sources—including service fees, state and federal funding, licenses and permits, and investment earnings—to help pay for the services residents depend on every day.
Maintaining a diverse mix of revenue sources helps reduce reliance on property taxes while providing the resources needed to support schools, public safety, infrastructure, libraries, parks, and many other community services.
Understanding Property Taxes
Several factors determine a property's annual tax bill.
The City's annual budget establishes how much property tax revenue must be raised. Property values are then determined independently through the City's assessment process and certified by the Massachusetts Department of Revenue. Finally, state law allows Cambridge to apply different tax rates for residential and commercial properties through the property tax classification system.
While the City cannot control changes in property values, it can determine the total amount of property taxes it collects each year as part of the annual budget process.
One of Cambridge's greatest financial strengths is its large commercial tax base. Commercial properties contribute a significant share of local property tax revenue, helping fund City services while reducing the tax burden on residential property owners.
As a result, Cambridge continues to have one of the lowest residential property tax rates in the Greater Boston region.
Where the City's Revenue Comes From
While property taxes provide the largest share of City revenue, Cambridge receives funding from several additional sources that support City operations. City revenues also include Charges for Services, Fines and Forfeits, Intergovernmental Revenue, Licenses and Permits, and Miscellaneous Revenue.
Taxes — $758.8 million
Property taxes are the City's largest revenue source. The City also receives revenue through other taxes and voluntary Payments in Lieu of Taxes (PILOT) from certain tax-exempt property owners.
Charges for Services — $107.2 million
Fees paid by users help support services such as recreation programs and other activities where individuals directly benefit from the service provided.
Intergovernmental Revenue — $62.8 million
Federal and state grants, state aid, and other governmental funding help support a variety of City programs and services.
Miscellaneous Revenue — $56 million
This category includes investment earnings, transfers from other funds, and a variety of other revenue sources that support City operations.
Licenses and Permits — $37.6 million
Revenue from permits and licenses helps support the administration and enforcement of City regulations, including building permits, fire permits, and business licenses.
Fines and Forfeits — $10.8 million
Revenue from parking violations and other municipal fines supports City operations while encouraging compliance with local laws and regulations.
Keeping Property Taxes as Low as Possible
Cambridge continues to look for opportunities to maximize non-property tax revenues whenever practical.
By collecting appropriate fees for services, administering permits and licenses, pursuing state and federal funding, and responsibly managing City resources, Cambridge reduces the amount that must be raised through property taxes alone.
For FY27, the total property tax levy—the total amount of property taxes collected by the City—is projected to increase by 6.9 percent, or approximately $46.8 million, compared with FY26. Those revenues help fund the services, infrastructure, and investments included in this year's budget.
The City continued its policy of maximizing non-property tax revenue sources to lower residents' tax burden for City services through enforcing license and permit policies, charging users for specific services where feasible, and collecting outstanding parking fines. Several key non-property tax revenues will be reviewed again in the fall as part of the property tax and classification process.
