NYC City Council Maintains Property Tax Interest Rates for FY2026, Rejecting Proposed Increases

On May 28, 2025, the New York City Council adopted five resolutions maintaining existing property tax late-payment interest rates and early-payment discounts for fiscal year 2026 (tax year 2025/26). Despite recommendations from the Banking Commission to significantly increase these rates, the Council opted for consistency, holding steady the same rates as the previous year.

Adopted Rates for FY2026

Category	FY 2025 Rate	FY 2026 Adopted Rate	Banking Commission Proposed Rate
Early-payment discount	0.50%	0.50%	0.50%
Installment-payment plans (qualified owners)	2.5%	2.5%	5%
Late payments (AV ≤ $250k)	6%	6%	8%
Late payments ($250k < AV ≤ $450k)	9%	9%	15%
Late payments (AV > $450k)	16%	16%	18%

Why the Council Maintained Current Rates

The Banking Commission proposed higher interest rates citing rising federal interest rates—prime rate at 7.5% and federal short-term rate at 4.05%. They emphasized that higher rates could incentivize timely payments and reduce revenue losses, noting nearly $33 million in forgone interest revenue for the City.

However, the Council prioritized affordability for property owners already managing increased borrowing costs. Key considerations included:

• Current high mortgage and HELOC rates around 8%.
• The city’s strong cash position, projected to be around $6.8 billion.
• Comparative rates with peer cities, aiming to avoid burdening smaller property owners.

Early Payment Discounts Remain Beneficial

In FY2025, 111,006 taxpayers took advantage of the early payment discount, generating approximately $6.3 million in total discounts but saving the City $1.6 million in billing costs. This strategy also benefited the city by roughly $23 million after investing early receipts, reinforcing the decision to maintain the 0.5% discount.

Historical Context and Practical Implications

Since FY2022, NYC has utilized a three-tiered interest rate system based on assessed property values, gradually increasing rates until this freeze in FY2026. Property owners can now confidently budget using last year’s rates. Additionally, the installment payment plan continues to provide an advantageous 2.5% interest rate—considerably lower than current market borrowing rates.

The 2.5% installment-payment interest rate is available exclusively to owner-occupants who meet specific income eligibility criteria and other related qualifications as determined by the city’s guidelines.

Key Takeaways for Property Owners

• Budget consistency: Your interest rate exposure remains unchanged from the previous year.
• Attractive installment plans: At a maintained low rate, installment plans remain beneficial for managing cash flow, for those who qualify.
• Early payment savings: Particularly beneficial for those holding substantial non-interest-bearing balances, early payment discounts effectively act as free savings.

By holding the line on property tax interest rates, the Council sends a clear signal: stability and affordability are prioritized over incremental and punitive revenue increases, providing a degree of certainty in challenging economic conditions.