How we collect property taxes, how we are allowed to do that is all decided under state law. And our Massachusetts state law is very specific on what towns can and cannot do.
— Jacqui Beebe Town Administrator, Eastham, MA
Understanding the Residential Tax Exemption
To address the rapid rise in real estate values and the increasing tax burden on year-round residents, more Cape Cod towns are turning to a policy tool that has been around for over 40 years.
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What is the residential tax exemption?
01 November 2025 – CAPE COD, MA – After votes taken this summer, nearly half the towns on Cape Cod have now adopted a decades-old property tax policy they say may bring some relief to struggling year-round residents.
Officials in Eastham and Chatham voted this summer to adopt a residential tax exemption. Massachusetts lawmakers established the exemption in 1979, and as of October 2025, seven of Cape Cod’s 15 towns have approved its use: Barnstable, Chatham, Eastham, Mashpee, Provincetown, Truro, and Wellfleet.
Why are towns adopting the RTE?
The residential tax exemption provides property tax breaks for full-time residents whose homes are at the lower end of the valuation range. The aim is to make it more affordable for people with ordinary jobs to live in the communities where they work.
“I think the crux of [the exemption] was to assist towns that are having their year-round communities lost,” Eastham Town Manager Jacqui Beebe said.
How does the exemption work?
Here’s how the exemption works: town officials shift a portion of the property tax burden from full-time residents with lower-valued properties to those with higher-valued properties and part-time residents.
The exemption redistributes the burden of property taxes without changing the total amount the town collects.
“We still have the same amount of property tax levy we need to collect,” Eastham Finance Director Rich Bienvenue said. “And so it’s not just a give-back to residents, it’s really a shift.”
Who qualifies for the exemption?
Full-time resident homeowners whose homes are valued below the “break-even point” for the town qualify for the exemption. The exemption is calculated on a sliding scale. The break-even point is determined by the number of full-time residential parcels in the town, and their total valuation. The lower the value of a given property, relative to the break-even point, the greater the tax break. For properties whose value exceeds the break-even point—even those owned by full-time residents—taxes will increase.
What role does full vs part time residency play?
Part-time residents do not qualify for the residential tax exemption and are unaffected by the break-even point. Instead, tax increases for the part-time population are determined by the residential tax exemption rate given to full-time residents.
Under the residential tax exemption, all part-time residents bear a property tax increase. This category includes any owner of a residential property who is not registered as a town resident, such as rental property owners and vacation homeowners.
“I think the towns that have adopted [the exemption]–seasonal communities, or Outer Cape communities, or island communities that have adopted it–it has been easier for them because their ratio of resident to non-resident is so great,” Bienvenue said.
What does state legislation allow?
For most communities, state legislation caps the exemption rate at 35 percent of the average assessed value of a town’s residential properties. Designation as a seasonal community allows local officials to raise the exemption to 50 percent. Eastham officials say many Cape Cod municipalities have adopted this designation.
According to Beebe, to receive the policy’s tax benefits, homeowners in communities using the exemption must prove their full-time residential status. Typically, applicants must submit a form, either online or in person. According to the state, an application must reach assessors by April 1 or three months after tax bills were mailed, whichever is later.
What have Cape Cod towns adopted?
As of 2024, the state permits any town in Barnstable County with more than 35 percent seasonal housing units to designate as a seasonal community with town meeting approval. As of October 2025, Provincetown and Truro have the highest residential tax exemption rates on the Cape: 35%.
“…I think the basis for voting [for the exemption] is to say, ‘we’re gonna give the year-round residents an exemption–a break, a little bit of a break–and this is how we’re gonna do it,’” Beebe said, referring to the high cost of living on the Cape. “And we’re hoping that those part-time residents can afford to pay the extra tax because it’s their second home, not their first home.”
