Levy ceiling under Proposition 2 1/2 is defined as 2.5 percent of the total full and fair cash value of all taxable real and personal property in the community.

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Prop 2 1/2 caps the annual property tax levy by tying it to the community’s property base. The ceiling is set as a fixed percentage of the total full and fair cash value of all taxable real and personal property in the community, so the maximum amount the town can raise in a year without voter approval is 2.5 percent of that value. This keeps tax growth in line with how large the tax base is, rather than linking it to a fixed tax rate. If the town needs to collect more, it would require a voter override or a debt exclusion. For example, with a total taxable value of 400 million, the maximum levy would be 10 million. The other percentages would describe different cap levels and do not reflect the actual Prop 2 1/2 rule.