Zohran Mamdani Opposes 9.5% Property Tax Hike as $5.4B Budget Gap Looms

(NEW YORK CITY, NY) — Mayor Zohran Mamdani proposed a 9.5% property tax rate increase as a “last resort” in his preliminary budget on February 17, 2026, tying the plan to whether Governor Kathy Hochul approves higher income taxes on the ultra-wealthy.

Mamdani framed the proposal as leverage on Albany and argued it should not shift the city’s fiscal problems onto ordinary residents. “The onus for resolving this crisis should not be placed on the backs of working and middle class New Yorkers,” he said.

City officials cast the increase as a contingent backstop for closing a $5.4 billion city budget shortfall, with the administration describing the change as broad-based across residential households and commercial properties in the five boroughs.

Rather than adding 9.5 percentage points to each tax class rate, the proposal applies a multiplier to existing class rates, a technical distinction that shapes how the increase ripples through New York City’s class-based property tax structure.

Under the plan’s fiscal framing, the administration projected the hike would yield $3.7 billion annually while affecting over 3 million households and 100,000 commercial properties across the five boroughs.

For FY 2027, the city said the plan equates to roughly a 10.1% effective increase atop baseline growth, a structure that makes the increase scale with existing liability rather than operate as a flat fee.

The proposal also came with a year-to-year revenue picture that underscores why the city’s class system matters to the overall budget. Total real property tax revenue would rise from $35.361 billion in 2026 (up 2.1% year-over-year) to $40.349 billion (up 14.1%), with the class-average rate moving from 12.283% to 13.450%.

Because the increase works as a multiplier, changes in billed amounts track the size of a household’s or business’s existing tax obligation. The administration illustrated that dynamic with examples such as $10,000 becoming $11,000 or $100,000 becoming $110,000 on tax bills.

The class-based structure can also affect how increases feel across different property types, because New York City taxes one- to three-family homes, larger multifamily buildings, and commercial properties under separate classes with different rates.

Using a 10% illustration “for clarity,” the city showed how class rates would shift in the same directional way under a multiplier-style hike: Class 1 residential (under 4 units) would move from 19.843% to 21.8%, Class 2 residential (over 3 units) from 12.439% to 13.7%, and Class 4 commercial from 10.848% to 11.9%.

Those illustrations sit at the center of the political argument over who ultimately bears the cost of a budget fix, because the city’s property tax system already distributes liability differently across homeowners, apartment buildings, and businesses.

Property taxes also make up a large share of the city’s overall tax collections, a backdrop that helps explain why a rate proposal can quickly become a broader affordability debate. The city’s property taxes represent 44% of city tax collections ($31.8 billion in 2023).

The proposal lands as homeowners and renters face wider housing-cost pressures, and comparisons help frame why the discussion extends beyond city budget watchers. Homeowners in New York face higher burdens than national averages, with property taxes accounting for 27% of homeownership costs versus 22.6% nationally, based on 2022 data.

At the state level, the effective property tax rate stands at 1.45% statewide, compared with the U.S. 0.89%, and average annual payments run $12,441 on a median home value of $800,000 as of Q3 2025, the figures cited alongside the city’s budget debate.

Hochul, responding to Mamdani’s posture toward Albany, emphasized cooperation and the city’s economic role in the state. “A strong New York City means a stronger New York State,” she said.

Final outcomes hinge on budget negotiations and legislative action in Albany, where Mamdani has positioned the city’s “last resort” property tax option as conditional on whether the governor approves higher income taxes on the ultra-wealthy.

The plan has drawn national attention in part because New York City already carries a reputation for high tax burdens, and WalletHub data show only four states exceed New York on that comparison.

As the proposal reverberates beyond the five boroughs, the debate has sharpened around affordability and distributional effects across property types, with the city’s multiplier approach ensuring that larger existing tax bills would see larger dollar increases.