NYC’s new mayor wants to tax the rich — or raise property taxes 9.5%

Mamdani lays out two budget paths

New York City Mayor Zohran Mamdani dropped a $127 billion preliminary budget on Feb. 17, and it came with a warning.

The city faces a $5.4 billion deficit over the next two years, and Mamdani says there are only two ways to fix it. His preferred path asks state lawmakers in Albany to raise taxes on the wealthy and on big corporations.

The backup plan is one nobody wants to hear: a 9.5% hike on property taxes. The city must balance its budget by law.

Adams left a budget mess behind

Mamdani blames the hole on what he calls years of bad budgeting by former Mayor Eric Adams. When Mamdani took office in January 2026, the city faced a projected $12 billion gap over two years.

One example: Adams budgeted about $860 million for cash assistance even though the actual cost was closer to $1.7 billion.

Higher-than-expected Wall Street revenues and $1.5 billion in state aid from Gov. Kathy Hochul brought the gap down.

A spokesperson for Adams said the former mayor inherited $10 billion in debt made worse by the pandemic. Some analysts also note that policies backed by Mamdani’s allies added to the growing costs.

The wealth tax hits millionaires hard

Mamdani wants Albany to approve a 2-percentage-point increase on the city income tax for households earning more than $1 million a year. That would push the city rate from about 3.88% to 5.88% for top earners.

For someone earning exactly $1 million, that means roughly $20,000 more in taxes each year. About 33,000 New Yorkers fall into that bracket.

Mamdani has sometimes described this as a “2% increase,” but calling it a 2-percentage-point hike is more accurate, and the difference matters.

Corporate taxes would nearly double

The mayor also wants the state to raise its corporate franchise tax rate to 11.5%, matching New Jersey. Right now, the top state rate is 7.25% for companies earning more than $5 million in profits.

But that number only tells part of the story. NYC businesses already pay a combined corporate rate of about 17.44% when city and MTA taxes are added in, the highest in the country.

Under Mamdani’s plan, that combined rate would jump to about 22.48%. Both proposals need approval from the state Legislature and the governor.

Hochul keeps saying no to tax hikes

Gov. Kathy Hochul has drawn a clear line. She has repeatedly said she will not raise taxes on the wealthy or on corporations.

She did commit $1.5 billion in state aid to the city over two years, including about $500 million in recurring funding.

Hochul has argued the state has enough revenue from Wall Street to cover current needs without new taxes. She’s also running for reelection in 2026 and faces a primary challenge from Lt. Gov. Antonio Delgado.

Hochul said she does not think a property tax increase is necessary either.

Property tax hike hits millions of New Yorkers

If Albany turns down the wealth and corporate tax plans, Mamdani says the city would raise property taxes by 9.5%.

The increase would hit more than 3 million residential units and over 100,000 commercial properties, generating an estimated $3.7 billion a year.

The last time NYC raised property taxes this way was in 2003 under Mayor Michael Bloomberg. Mamdani called it a last resort, saying working New Yorkers should not have to carry the burden of closing the gap.

City leaders pushed back immediately

The property tax idea drew sharp criticism from across the city government. City Council Speaker Julie Menin said property tax increases should not even be on the table.

Comptroller Mark Levine called the proposal extreme and said it relied on aggressive revenue projections.

Queens Borough President Donovan Richards warned it could force people out of their homes and set back generational wealth.

NYC’s property tax system has long been called broken and unfair, favoring single-family homes and luxury condos while placing heavier burdens on multi-family buildings.

Watchdogs say cut spending first

The Citizens Budget Commission (CBC) urged the city to find savings before raising any taxes.

CBC has pointed out that NYC’s combined corporate tax rate is already the highest in the nation, and CBC President Andrew Rein called Mamdani’s framing a false choice.

The group estimated the city could save up to $1 billion if the state granted relief from class-size mandates alone. For context, NYC’s budget is larger than the budgets of Chicago, Los Angeles, and Houston combined.

Mamdani created chief savings officers in every city agency, with reports due March 20.

Business groups warn that companies could leave

The Partnership for New York City warned that businesses could easily move to nearby states to dodge higher taxes. Low-tax states like New Hampshire and Florida have publicly urged NYC businesses to relocate.

New York already collects the most taxes per person of any state in the country.

The state’s share of the nation’s millionaires dropped from about 12.7% in 2010 to about 8.7% in 2022.

Supporters of the tax plan push back, though, pointing out that high-tax states like New Jersey, Massachusetts, and California have not seen a mass exit.

Allies file a 25% corporate surcharge bill

Assemblywoman Diana Moreno and Sen. Kristen Gonzalez filed a bill that would let NYC levy a surcharge of up to 25% on corporate taxes.

Moreno is a fellow democratic socialist who won Mamdani’s old Queens Assembly seat after he ran for mayor. The bill would give the mayor and City Council the power to set the surcharge as they see fit.

It does not estimate how much money the surcharge would bring in.

The bill is separate from Mamdani’s own proposals but pushes in the same direction: more taxes on corporations.

Progressives rally behind the plan

Twenty-two progressive Democrats on the 51-member City Council called on Hochul to support what they call the Fair Share Act, which would set a 2-percentage-point surtax on NYC households earning more than $1 million.

About 1,200 protesters rallied at the State Capitol in Albany in late February to push Hochul on the issue. Mamdani’s supporters have framed any resulting property tax hike as Hochul’s fault, not the mayor’s.

The City Council’s formal response to the preliminary budget is due April 1, 2026.

The clock is ticking on a final budget

Chief savings officers at every city agency must turn in their reports by March 20. The City Council is expected to respond to the preliminary budget by April 1.

The final budget must pass by July 1, when the new fiscal year begins.

Whether Hochul moves on the tax question may depend on pressure from progressive lawmakers and her own reelection fight.

If neither path wins approval, the city’s budget gap is projected to grow to about $7 billion the following year.

This article was created with AI assistance and human editing.

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