In 1978, the citizens of the Commonwealth of Massachusetts adopted a constitutional amendment authorizing the General Court to classify real property into as many as four classes and to tax such classes differently. In 1979, the General Court adopted an act which implemented the desires of the citizens. The act enjoyed popular support as a means to prevent the shifting of taxes from business property onto residential property as a result of court-ordered revaluations.

Classification does not raise additional dollars from the property tax.

Preferential tax treatment for residential property is not required but is, rather, a local option.

The Commissioner of Revenue supervises the implementation of property classification. After the Commissioner has determined that a city or town's assessed values represent full and fair cash values, the assessors classify all real property according to use. Local elected officials are then permitted to determine, within limits calculated by the Commissioner, what percentage of the tax burden is to be borne by each property class.

The determination whether to allocate the tax burden by class is made annually. In a city, the decision to allocate tax burdens in accordance with the law is made by the City Council, with the approval of the Mayor; in a town, the decision is made by the Board of Selectmen at a public hearing.

Massachusetts law provides for three phases: first, every city and town must value all taxable property at full and fair cash value; second, each city and town must classify every parcel of property according to use; third, each city and town which has revalued and classified may allocate its tax levy among classes of property.