Salem City Council approves personal property tax exemption for micro businesses at $1,000 threshold

The Salem City Council Committee on Administration and Finance convened on July 30, 2025, to discuss a significant proposal aimed at providing tax relief to small businesses. The meeting focused on adopting a minimum taxable value for personal property accounts, which would exempt accounts valued under $1,000 from taxation.

The proposed exemption aligns with Massachusetts general law, which allows cities to establish a threshold for personal property tax exemptions. Currently, approximately 65% of municipalities in the state have adopted similar measures. The exemption is expected to benefit micro and small businesses in Salem by reducing their tax burden and improving the efficiency of municipal operations. It was noted that the cost of collecting taxes on these smaller accounts often exceeds the revenue generated.

Steven Cortez, the Director of Assessing, provided an overview of personal property tax in Massachusetts, explaining that it applies to tangible, movable assets such as equipment and machinery. He emphasized the importance of personal property taxes as a stable revenue source for local services, including schools and public safety.

The committee highlighted that adopting the $1,000 threshold would relieve approximately 187 small businesses from taxation, with a minimal impact on the overall tax levy. The shift in tax revenue would amount to less than half a percent, allowing the city to maintain a fair tax base while supporting local businesses.

Cortez also addressed concerns regarding the administrative burden of managing small accounts, noting that the current system incurs significant costs for the city. The proposed exemption would streamline operations and allow resources to be redirected toward higher-impact areas.

The committee's discussions underscored the city's commitment to supporting small businesses while ensuring fiscal responsibility. The proposal will be voted on by the city council, with the potential for future adjustments to the exemption threshold based on community needs.