Massachusetts passes law to make housing cheaper to build
With the Governor’s signature, a new tax exemption to reduce construction costs and stimulate new housing development across Massachusetts has officially become law.
Authored and advanced by Senate President Karen Spilka (D—Ashland) and Senator Julian Cyr (D–Provincetown), this measure establishes a new state sales tax exemption on building materials used in approved affordable, moderate‐income, and middle‐income multifamily housing projects. The exemption, up to $35 million annually, was enacted as part of the Fair Share supplemental budget—a wide‐ranging package that directs significant new investments into education, transportation, public health, and community infrastructure.
The new tax credit is designed to counteract the steep rise in construction costs driven by federal tariffs, supply‐chain disruptions, and ongoing economic uncertainty. Developers report that the state’s sales tax on construction materials can account for between 1.5 and 5 percent of total project costs—which can be the difference between a project breaking ground or being abandoned.
The Healey-Driscoll Administration’s Unlocking Housing Production Commission, a statewide panel of experts convened to identify strategies to increase housing supply, found that targeted tax relief on construction materials could meaningfully improve project feasibility — particularly in communities where rents and home prices cannot simply be raised to offset rising costs.
"This is a real win for Massachusetts," said Senate President Karen Spilka (D-Ashland). "Eliminating the sales tax on building materials for priority housing projects will lower the cost of construction, get more homes built, and help keep costs down for homebuyers. Every
Massachusetts resident deserves a place to call home. We will keep pursuing bold, innovative solutions like this one until that is a reality.”
By lowering upfront costs, the new law aims to support new development in communities where it is most needed and help Massachusetts meet its long‐term housing needs.
“I hear every day that the failure to build housing in Massachusetts is having detrimental impacts to our residents and employers,” Senator Cyr said. “There’s no one fix, but the Senate is determined to make it faster and cheaper to build the homes Massachusetts needs. This measure is a significant step toward accelerating production and easing the pressure on working families.”
Housing leaders and advocates applauded the provision, saying the tax incentive will encourage developers to ramp up production.
“CHAPA applauds the Legislature for taking this step to address the high cost of building multifamily housing,” said Maritza Crossen, Chief Operating Officer and Interim CEO at Citizens' Housing & Planning Association. “Through this sales tax exemption, more low and moderate income households will be able to find a home that is more affordable to them. The housing challenges facing Massachusetts are significant, but we know that when policymakers, housing advocates, and community leaders work together, we can advance the solutions needed to produce more homes and create thriving communities across the Commonwealth. We are grateful for the leadership shown by Senate President Spilka, Senator Cyr, and all of our lawmakers in addressing these issues head-on.”
A provision filed by Senator Cyr in the FY26 GAA budget first studied the proposed sales tax credit on construction materials, with the Executive Office of Housing and Livable Communities issuing a report in December 2025.
"MACDC applauds the Legislature and the Healey Driscoll Administration for seeking creative ways to reduce the high cost of housing development in Massachusetts,” said Emily Haber, President & CEO of the Massachusetts Association of Community Development Corporations. “This tax exemption will help provide an incentive for developers to produce much needed affordable housing in the Commonwealth.”
The broader supplemental budget signed Friday includes major investments across state government—including early literacy and special education, public health, transportation infrastructure and regional transit—underscoring the Commonwealth’s commitment to long‐term economic stability and community well‐being. The construction materials exemption stands out as a targeted, high‐impact tool to accelerate housing production at a moment when Massachusetts must build more than 200,000 new homes in the coming decade to meet demand.
“The Sales Tax Exemption for Multifamily Housing Materials advances a recommendation made by the Unlocking Housing Production Commission, and pairs meaningful incentives with appropriate guardrails to catalyze the multifamily housing development the Commonwealth urgently needs,” said Tamara Small, CEO of NAIOP Massachusetts, The Commercial Real
Estate Development Association and member of the Governor’s Unlocking Housing Production Commission. “NAIOP is grateful to the Legislature and the Governor for enacting this targeted strategy to reduce construction costs, which will help make projects financially viable and bring desperately needed housing units to market faster.”
For communities across the Commonwealth, where housing constraints are increasingly driving workforce shortages and economic strain, the inclusion of this measure will drive tangible relief to address one of the region’s most pressing challenges.
“We greatly appreciate Senate President Spilka and Senator Cyr’s outstanding leadership on addressing affordable housing needs during these challenging times for low and middle income families,” said Aaron Gornstein, President and CEO of Preservation of Affordable Housing (POAH). “This innovative sales tax exemption represents another step forward by the Massachusetts legislature and the Healey-Driscoll Administration to increase affordable housing production across the Commonwealth and reduce construction costs.”