HARRISBURG, PA — Pennsylvania municipalities would face new limits on annual property tax increases under legislation introduced Nov. 5 by state Rep. Zachary Mako, who cited Uwchlan Township’s sharp 2026 tax increase as evidence that homeowners need protection from sudden increases in local tax rates.
House Bill 2889 would prohibit cities, boroughs and townships from raising municipal real estate tax rates by more than 4% annually or the previous year’s regional inflation rate, whichever is lower. Larger increases would require approval from a majority of voters in a municipal referendum.
The proposal would establish a statewide restriction on year-over-year municipal property tax rate increases, limiting the ability of local governments to raise additional revenue for public safety, infrastructure and other services without voter authorization.
Mako, a Republican representing portions of Lehigh and Northampton counties, introduced the legislation Nov. 5 with four Republican co-sponsors. It was referred to the House Local Government Committee on Nov. 6.
The bill remains an introduced proposal. It has received no committee or House vote, and no committee meeting has been scheduled.
Under the legislation, municipalities would calculate their maximum allowable annual increase using the Consumer Price Index for All Urban Consumers for the applicable region, as published by the U.S. Bureau of Labor Statistics.
If regional inflation were 2.5%, for example, a municipality could increase its property tax rate by no more than 2.5% without voter approval. If inflation exceeded 4%, the maximum allowable increase would remain 4%.
Municipalities would be prohibited from increasing their rates when the applicable inflation measure declines.
The restrictions would apply to both aggregate municipal real estate tax rates and separate property tax levies imposed for municipal purposes.
Mako’s co-sponsorship memorandum specifically identified Uwchlan Township in Chester County as an example of the increases his legislation seeks to prevent.
The township raised its general real estate tax rate from 0.44 mills in 2025 to as much as 1.025 mills in 2026, following its first general property tax increase since 1989.
Mako characterized Uwchlan’s proposal as a 133% increase, citing the township’s explanation that it had gone decades without raising the tax.
Uwchlan officials attributed the increase to an anticipated $854,000 budget deficit, declining earned income tax revenue, and additional funding needs for fire protection.
The township estimated that a property assessed at $200,000 would owe as much as $205 in annual municipal real estate taxes under the higher rate.
Mako also cited a 23.7% property tax increase in Whitehall Township, Lehigh County, and a 26.4% increase in South Fayette Township, Allegheny County, as examples of substantial municipal tax adjustments.
“Under current Pennsylvania law, boroughs, townships, and cities are generally subject to statutory limits on their property tax rates, but there is not a uniform statewide restriction on how much those rates can increase from one year to the next,” Mako wrote in his legislative memorandum.
“As a result, municipalities can impose substantial tax increases on homeowners in a single year, placing additional financial burdens on families and individuals already struggling with rising costs.”
The proposed cap would not prevent municipalities from seeking larger increases, but it would transfer final approval of those increases from local governing bodies to voters.
A municipality seeking to exceed the limit would first have to adopt a resolution authorizing a referendum at least 60 days before an election.
The referendum would be held at the election immediately preceding the fiscal year in which the higher tax rate would take effect.
The ballot question would have to identify the proposed percentage increase and resulting millage rate.
Municipal officials would also be required to prepare an explanatory statement identifying how the additional revenue would be used and the consequences if voters rejected the proposal.
The county board of elections would place the referendum question on the ballot, and approval would require a majority of participating voters.
For Chester County municipalities, the requirements could complicate efforts to address unexpected revenue shortfalls or substantial increases in fire protection, police services, and infrastructure costs.
Municipalities that have deferred property tax increases for several years could face particular constraints if accumulated expenses require adjustments exceeding the annual inflation-based ceiling.
The legislation would also establish special rules following countywide property reassessments.
For the first fiscal year after a reassessment, the allowable increase would be calculated against a revenue-neutral tax rate designed to generate the same aggregate property tax revenue from properties on the preceding year’s tax rolls.
That provision would prevent municipalities from using reassessment-related changes in property values to bypass the annual rate limitation.
The bill would apply to cities, boroughs, incorporated towns, townships and municipalities operating under home-rule charters or optional plans.
Counties and school districts would be excluded, as would Philadelphia and Pittsburgh.
The legislation specifically limits municipal real estate tax rates rather than individual property tax bills. It would not impose comparable restrictions on earned income taxes, utility charges or municipal fees.
It also contains no appropriation or additional state funding for municipalities affected by the proposed restrictions.
For homeowners, the distinction between tax rates and tax bills is significant. Changes in property assessments or other factors could affect an individual property’s tax liability even when the municipality’s overall rate remains within the proposed ceiling.
The measure would apply to taxes levied for fiscal years beginning Jan. 1, 2028, or later. The legislation separately provides that the act would take effect 60 days after enactment.
Mako described the proposed restriction as a way to improve predictability for property owners while allowing municipalities to adjust taxes for inflation.
“Pennsylvania homeowners deserve protection from sudden and excessive property tax increases,” he wrote. “While broader property tax reform remains an important goal, limiting annual increases is a practical step we can take now to make homeownership more affordable.”
The legislation’s five Republican sponsors are Mako and Reps. Ann Flood, Andrew Kuzma, Milou Mackenzie, and Joe Olsommer. No Chester County lawmaker is currently listed as a sponsor.
The proposal now awaits consideration by the House Local Government Committee, where lawmakers would determine whether to advance the restrictions for further legislative action.
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