New York City mayor proposes first property tax hike in 17 years

Mayor unveils plan to close billion-dollar gap

New York City Mayor Zohran Mamdani released a $127 billion preliminary budget on Feb. 17 that includes a 9.5% property tax hike.

The increase would help close a $5.4 billion deficit the city faces over the next two years. Mamdani called the tax hike a “last resort.”

He said he’d rather see Albany raise income taxes on New Yorkers earning more than $1 million a year and boost corporate taxes.

Those changes need approval from Gov. Kathy Hochul and the state legislature, which the city can’t control.

Years of underbudgeting built the deficit

Mamdani blamed the budget hole on years of shortchanging key programs under former Mayor Eric Adams, including rental assistance, shelter operations, and special education.

When Mamdani took office in January 2026, his team pegged the two-year gap at about $12 billion.

A combination of savings efforts, updated revenue projections, and $1.5 billion in new state funding from Hochul brought that number down to $5.4 billion.

Mamdani also ordered every city agency to appoint a Chief Savings Officer to find ongoing cost cuts.

The hike would hit millions of properties

The 9.5% increase would touch more than three million residential units across all five boroughs and more than 100,000 commercial buildings. It would bring in an estimated $3.7 billion for fiscal year 2027.

Mamdani said the affected residential property owners have a median income of about $122,000.

Property owners and landlord groups pushed back quickly, warning that landlords could pass the cost on to renters through higher monthly rents.

Reserves take a major hit too

The budget doesn’t rely on the tax hike alone. It also pulls about $980 million from the city’s Rainy Day Reserve Fund in fiscal year 2026 and about $229 million from the Retiree Health Benefit Trust in fiscal year 2027.

Mamdani said his administration plans to put that money back by fiscal year 2028. But the Rainy Day Fund withdrawal would cut the reserve roughly in half.

Fiscal watchdogs warned that draining reserves this deeply outside a recession leaves the city exposed.

NYC hasn’t raised rates since 2009

The city’s property tax rate has held steady since about 2009.

The last big increase came under Mayor Michael Bloomberg, who approved an 18.5% hike in late 2002 after the fiscal crisis that followed the Sept. 11 attacks.

Bloomberg later cut the rate briefly in fiscal year 2008 before raising it again during the Great Recession. Mamdani’s proposed 9.5% increase would mark the first direct rate change in nearly a generation.

Hochul says she won’t support it

Gov. Hochul, a Democrat running for reelection, said she does not back a property tax increase. She pointed out that the preliminary budget is just a starting point, not a final plan.

Hochul has said repeatedly that she will not raise taxes on the wealthy this year.

The day before Mamdani’s announcement, she committed an additional $1.5 billion in state funding to help the city, including about $510 million in recurring support.

City Council calls the hike a nonstarter

City Council Speaker Julie Menin said the property tax increase is “not on the table.”

Menin and Finance Chair Linda Lee said the Council would look for more savings and revenue before raising costs on property owners and small businesses.

Any property tax hike needs Council approval to take effect.

The Council plans to release its own budget projections in the coming weeks ahead of preliminary budget hearings this spring.

Comptroller calls the tax system unfair

City Comptroller Mark Levine called the proposed hike a regressive measure.

He said New York City’s current property tax system already hits homeowners and communities of color harder than wealthier areas.

Levine pushed the city to find more savings and called on Albany to step up with additional help. Still, he acknowledged there are “no easy options” when it comes to closing a gap this size.

Budget watchdogs say a third path exists

The Citizens Budget Commission said Mamdani’s framing presents a false choice between the property tax hike and state-level taxes.

CBC President Andrew Rein argued the city should focus on cutting spending that doesn’t improve New Yorkers’ lives.

Queens Borough President Donovan Richards warned the hike could push homeowners out of their homes, especially in Southeast Queens. Some critics argued the mayor is growing spending rather than making the tough cuts.

Mamdani’s political identity shapes the fight

Mamdani is a member of both the Democratic Party and the Democratic Socialists of America. He ran on a platform of taxing the wealthy, freezing rents, and making buses fare-free.

He has framed the budget standoff as a question of who should pay, not whether taxes should go up.

The preliminary budget doesn’t yet fund some of his biggest campaign promises, including a proposed Department of Community Safety.

The real negotiations start now

This is a preliminary budget, meaning it’s the opening move in months of back-and-forth. The City Council will hold hearings and release a formal response by April 1.

Mamdani’s executive budget, with more detail, is due in late April. The final budget must pass by June 30, before the new fiscal year starts July 1.

A lot depends on whether Albany agrees to any new revenue measures during state budget talks this spring.

Mamdani bets Albany will blink first

Mamdani is gambling that the threat of a regressive property tax hike will pressure Hochul and Albany into approving taxes on the wealthy instead.

Hochul faces reelection with much of her Democratic base living in the five boroughs. If Albany doesn’t act, Mamdani would need the City Council to approve the hike, and Menin has already said no.

The final budget will likely look very different from this proposal.

New York City must pass a balanced budget every year, a rule in place since the fiscal crisis of the 1970s.

This article was created with AI assistance and human editing.

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