Allowable tax levy growth factor to remain at 2% despite inflation

On Board Online • February 3, 2025

By Paul Heiser
Senior Research Analyst

The New York State Comptroller has announced that the allowable levy growth factor - a key component of the property tax cap - will be 2% for 2025-26 school budgets.

The allowable levy growth factor is the amount by which a school district's property tax levy may increase from one year to the next. By law, it is limited to the lesser of 2% or the change in the Consumer Price Index, which in 2025 is 2.95% for local governments whose fiscal years begin on July 1.

"Inflation has been higher than 2% for the past four years," noted NYSSBA Executive Director Robert Schneider. "When the allowable tax levy growth factor lags behind inflation, school districts are pinched between greater expenses and limited ability to increase tax revenue without supermajority approval."

Individual school districts may end up with allowable property tax levy increases that are greater or less than 2% due to applicable exemptions, including capital expenses, adjustments for payments in lieu of taxes (PILOTs), and other factors that are part of the tax cap formula.

"The good news is that the governor appears to have abandoned the idea of reducing state aid to districts that have had significant enrollment declines over time," Schneider said. "NYSSBA will be participating in ongoing discussions in Albany on how foundation aid can be modernized and improved."