For New York City cooperative and condominium boards, Mayor Zohran Mamdani’s proposed 2026 budget is concerning. To fund this expansive budget with significant increases in City spending, the mayor is seeking tax increases. He has threatened a 9.5% increase in the property tax rates if New York State will not approve a 2% “Wealth Tax.” Either tax optionposes a risk to the city’s economic base.
New York City residents pay among the highest state and local taxes in the nation, by a factor between 46% and 79%. This burden is driven by high personal income taxes, as well as business and property taxes, all heavily impacting middle- and high-income residents.
The 2% “Wealth Tax” appears to be dead on arrival. Governor Kathy Hochul, who is running for reelection in 2026, has stated she has no intention of raising New York State’s already-high income tax rates. There are legitimate concerns that the city’s personal income tax base may have reached the point of exhaustion, even with the partial restoration of the SALT deduction.
New York City property taxes are not necessarily a viable source of additional revenue. The City’s property taxes are under a judicial microscope. See Tax Equity Now New York v. City of New York, New York Supreme Index No. 153759/2017 (TENNY Litigation).
There are issues about the fundamental fairness of the property tax in New York City. For example, cooperative and condominium units pay not less than four times the amount of property tax as a similarly valued townhouse.
There are also valuation issues. Some older, so-called “White Glove” buildings on Fifth and Park Avenues have substantially lower tax valuations than newer buildings, including some occupied by moderate income owners, without any economic justification.
There is evidence that minority communities are unfairly burdened financially as a result. While the TENNY litigation appears to be stayed while the various government actors involved consider solutions, the unfairness to certain minority communities and to all cooperative and condominium owners in post-1974 buildings continue.
Significantly, a proposal dated December 29, 2021, which addresses many of the issues noted above, languishes. The core recommendation is to tax all properties based on fair market value and fix the rates for all residential properties at the same level.
Against this backdrop, Julie Menin, speaker of the New York City Council, has rejected the mayor’s call for a 9.5% property tax rate hike. She has called upon the Mayor to reduce his budget significantly.
The mayor is also looking to add a mansion tax surcharge on residential properties sold for $5,000,000 or more. There are other tax increase efforts addressed to so-called high-income earners, those with New York State adjusted gross income (AGI) of more than $110,000 (married/filing jointly or $75,000 for single filers). These include reducing the childcare tax credit.
There are other proposals to reduce the Unincorporated Business Tax credit for those with City taxable incomes of more than $142,000. Finally, for taxpayers with a New York State AGI of more than $142,000, there is a supplemental tax that mandates all income be taxed at 8.82%. If these efforts raise 20% of the $5.5 billion budget shortfall, the mayor will be lucky.
The foregoing is taking place at a time when there are reports that California has lost $1 trillion in wealth in face of a proposed wealth tax. Over the last five years, New York City has lost approximately $14 billion in income to Florida.
This suggests that NYC is exhausting its tax base. The governor may agree. As recently as March 18, 2026, she was quoted as saying that she wanted New Yorkers who had left the state for tax reasons to return and she mentioned that other states provide lower tax alternatives to New York.
At this point, condominium and cooperative boards have limited options, providing that their buildings are applying for the cooperative-condominium property tax abatement program, ensuring that qualified unit owners benefit and continuing to press for meaningful property tax reform, which would enhance the property values in four-plus-unit cooperative and condominium buildings.
Carol A. Sigmond
Partner
Nossaman LLP
12 East 49th Street, 22nd Floor
New York, NY 10017
