The New York City Department of Finance (DOF) is currently mailing out the second half, or third quarter, property tax bills for the 2024/25 tax year. These bills, dated November 16, 2024, are for payment due on January 1, 2025. This marks an important update as these bills are the first for the 2024/25 tax year to reflect the finalized property tax rates. Here’s what that means for property owners in different tax classes.
Updated Property Tax Rates for 2024/25
The first half of the 2024/25 tax year (billed in June 2024, for payment due in July 2024) used last year’s tax rates from tax year 2023/24. However, these new November 2024 bills incorporate the finalized rates for tax year 2024/25 and apply them retroactively to the beginning of the tax year—starting from July 1, 2024. For predominantly residential properties in Tax Classes 1 and 2, there was little to no change in the tax rate between 2023/24 and 2024/25, meaning the second half tax bills will largely resemble the first half.
For commercial properties in Tax Class 4, however, there is a significant adjustment. The tax rate for 2023/24 was 10.592%, and this was the rate applied to the first half of the 2024/25 tax year. The final tax rate for 2024/25 has been set at 10.762%, which represents a 1.6% increase year over year. This increase results in an effective tax rate for the second half of the 2024/25 tax year of 10.932%, which is referred to as a “make-up rate.” Taxpayers will not see this specific rate listed on their bills, but they will notice an “adopted tax rate” charge that adjusts for the new rate differential.
To put this into perspective, the tax class 4 second half tax will be approximately 3.21% greater than the first half tax due to this make-up adjustment. Specifically, there will be an “adopted tax rate” charge on the November 16, 2024, bill which equals 3.21% of what was billed on the first half—essentially making up for the retroactive increase in the rate.
For Tax Class 2 properties, the news is a bit different: the “adopted tax rate” charge will be negative, reflecting a slight decrease in the tax rate since the June bill.
Example Calculation for a Hypothetical Tax Class 4 Property
Let’s walk through an example to make this clearer. Imagine a commercial property in Tax Class 4 with a billable assessed value of $10,000,000 for tax year 2024/25.
- First Half Bill (based on 2023/24 rate of 10.592%):
- $10,000,000 x 10.592% = $1,059,200 (annual property tax billed in June 2024 for payment due July 1, 2024).
- 50% x $1,059,200 = $529,600 (first half payment due July 1, 2024).
- Second Half Bill Breakdown:
- Base Property Tax (at the new 2024/25 rate of 10.762%):
- $10,000,000 x 10.762% = $1,076,200 (annual property tax recalculated).
- Amount due January 1, 2025 = $1,076,200 – $529,600 = $546,600 = $10,000,000 x 10.932% x 50%.
- Adopted Tax Rate Charge (the “make-up” adjustment to reflect the new rate retroactively):
- $529,600 x 3.21% = $17,000.
- Base Property Tax (at the new 2024/25 rate of 10.762%):
Thus, the total for the second half of the 2024/25 tax year is $529,600 + $17,000 = $546,600, making the second half tax 3.21% greater than the first half.
Other Important Considerations
- Interest on Late Payments: Property owners should also be mindful of interest rates for late payments of property taxes:
- 6% for properties with an assessed value less than or equal to $250,000.
- 9% for assessed values greater than $250,000 but less than or equal to $450,000.
- 16% for properties with an assessed value greater than $450,000.
These rates apply from July 1, 2024, through June 30, 2025, and interest compounds daily. Therefore, timely payment is crucial to avoid unnecessary costs.
- Successful Property Tax Reductions: If your property achieved a successful property tax reduction settlement with the Tax Commission since the last bill (dated August 24, 2024), the new lower assessment and reduced annual tax will be reflected in this November 16th bill.
The third quarter property tax bill brings with it some changes that reflect the finalized tax rates for the 2024/25 tax year, particularly for commercial property owners. Be sure to review your bill carefully, note any adjustments, and plan your payments to avoid additional interest charges.
See our prior coverage of the property tax rates:
- New York City Council Approves Property Tax Rates for Fiscal Year 2024/25 | Rosenberg & Estis, P.C.
- 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.