NYC Property Tax Is Climbing — And the Wealthy Are Finally Being Asked to Pay Their Share

For decades, New York City’s property tax system has been hard to understand, touchy on politics, and kind to those who don’t need a break the most. If you compare a billionaire’s property tax bill to the real market value of their penthouse with a view of Central Park, it might not seem like much. It’s not a mistake. It’s because the city’s assessment system is so old that property values are often 10 percent or less of what they would fetch on the open market.

That system is being pushed right now. Late in May 2026, lawmakers in New York State passed the pied-à-terre tax, a new tax on homes worth $1 million or more that are not used as the main home. Easy to understand goal: help close a big hole in the city’s budget. About $500 million a year is expected to come in. It’s harder to say if it will really change how the city deals with high-end real estate.

The tax is put in place in two stages. For the first two years, properties worth between $1 million and $3 million according to the city’s Department of Finance will be taxed at a rate of 4% per year. The rate for people with $3 million to $5 million is 5.25%, and the rate for people with more than $5 million is 6.50%. When the city switches to comparable-sales-based valuations in 2028, those rates will drop by a lot. However, most owners will still owe more money because the valuations will go up so much.

The announcement sounded like it was meant to be dramatic. A video was posted by Mayor Zohran Mamdani from outside of 220 Central Park South. This is the building where Citadel CEO Ken Griffin owns a 24,000-square-foot penthouse that he bought for $238 million in 2019. The city only values that apartment at $15.5 million right now. This is the kind of difference that makes tax lawyers money. Griffin’s property tax bill is currently around $858,000. Under the new plan, that amount would almost double in the first phase and get close to $4 million once the new valuations are in place.

Griffin pushed back in public, saying that if Florida got jobs and investment, they would leave New York for Florida. It’s a threat that has some weight given how people have been moving around lately, but it’s also important to remember that many billionaires have made similar threats before without following through. There is real tension, but it’s not clear what will happen.

It’s not hard to see that the NYC property tax has always been a system that has benefits for some people. The real property tax rate in Brooklyn is about 0.73 percent, which is much lower than the national average of 0.89 percent. Queens has a rate of 0.88 percent. These aren’t very high numbers for a market where homes are very expensive. The city’s class-based assessment system is a big part of this. Residential one- to three-family homes are only assessed at 6% of their market value, while commercial and apartment buildings are assessed at 45%. Because of this, homeowners, especially those in the outer boroughs, often pay a lot less than what the news might say.

Still, things are not looking good for New York State as a whole. The state’s effective rate of 1.45% is almost twice as high as the national average, and the average statewide annual bill is more than $6,500. Effective rates go over 2.5% in places like St. Lawrence and Chemung. Long time residents of upstate New York have felt the pinch in a way that buyers in Manhattan don’t always do.

As I watch all of this happen, I get the impression that the city is trying to find the perfect balance between trying to raise money from high-end properties without causing people to leave the city and keeping the current assessment system in place, which has kept the cost of living low for most New Yorkers despite its flaws. It will become clearer over the next few budget cycles whether the pied-à-terre tax achieves that balance or just changes the political conversation without really fixing anything.