The New York City Council has approved new property tax rates for the fiscal year 2024/25. The resolutions address changes in property values and align with recent legislative amendments affecting how property taxes are calculated and distributed among the city’s four property classes.
Key Decisions and Their Impacts
Limiting the Class Share Increase to 0.9%
The Council has set a 0.9% cap on the increase of the Current Base Proportion for any property class over the Adjusted Base Proportion of the previous year. This decision is enabled by Chapter 210 of the Laws of New York of 2024, which allows the Council to adjust the standard 5% cap to a lower percentage, provided it does not exceed 5% and is established before November 1, 2024.
Impact: By implementing the 0.9% cap, the Council has adjusted the distribution of the tax levy among the property classes. This action affects the tax rates for Classes 1 through 4, resulting in varying changes for each class.
New Property Tax Rates by Class
The approved tax rates for the fiscal year 2024/25, along with the previous year’s rates, are as follows:
Note: One basis point is equal to 0.01%. An increase of 17 basis points means the tax rate for Class 4 properties has increased by 0.17 percentage points.
Understanding the Adjusted Base Proportions
The property tax distribution is determined by calculations involving the Current Base Proportions (CBP) and Adjusted Base Proportions (ABP), which reflect changes in market values and physical changes to properties. This year, initial calculations showed that Class 1 would experience a significant increase in its share of the tax levy. To prevent disproportionate tax increases, the Council applied the 0.9% cap, redistributing the excess burden from Class 1 to Classes 3 and 4. The Council’s intent was to prevent undue hardship on homeowners.
Application of the 0.9% Cap
The following table illustrates the changes in the Current Base Proportions before and after applying the 0.9% cap, along with the resulting impact on tax rates:
Explanation:
- Percent Change Before Cap Adjustment: Initial calculations showed significant shifts in the tax burden among classes due to changes in market values and state equalization rates.
- Percent Change After Cap Adjustment: Applying the 0.9% cap adjusted the distribution to limit the increase for any class to no more than 0.9% over the previous year’s proportion.
- Tax Rate Change: The adjustments resulted in changes to the tax rates for each class as shown.
Balancing the City’s Budget
The Council’s resolution is part of finalizing the city’s budget for fiscal year 2025, which totals $112.43 billion. The property tax levy contributes $36.86 billion toward this budget. After accounting for uncollectible taxes, refunds, and prior-year collections, the net amount to be raised through property taxes is $34.16 billion.
Allocation of Funds: The revenue from property taxes funds essential city services, including education, public safety, infrastructure maintenance, and debt obligations.
Next Steps for Property Owners
The NYC Department of Finance will send updated tax bills in November 2024 reflecting these new rates. The new rates will be retroactive to the start of the tax year, July 1, 2024, and cover the tax year through June 30, 2025.
See our prior coverage of the property tax rates:
- NYC Budget 2024/2025 and Property Tax Updates | Rosenberg & Estis, P.C.
- NYC DOF Mails Second Quarter Property Tax Bills for Tax Year 2024/25 | Rosenberg & Estis, P.C.
- Step Closer to Revising 2024/25 Tax Rates | Rosenberg & Estis, P.C.
- NYC Property Tax Rates Amended for 2023-2024 | Rosenberg & Estis, P.C.
- NYC Property Tax Rates for 2023-2024 | Rosenberg & Estis, P.C.
- NYC commercial property tax rates compared to 9 other major cities | Rosenberg & Estis, P.C.