New York City Property Tax Levy and Rates for Fiscal Year 2026

New York City Property Tax Levy and Rates for Fiscal Year 2026

New York City recently concluded its annual process of determining the property tax levy and setting interim property tax rates for the fiscal year ending June 30, 2026. This procedure, finalized by City Council resolutions on June 30, 2025, includes multiple detailed steps designed to balance the city’s budget while equitably distributing the tax burden among the different property classes. However, it is important to note that these rates are provisional, pending potential legislative adjustments.

Determining the Property Tax Levy

The first step in this process is calculating the total revenue the city must collect through property taxes to balance its budget. For fiscal year 2026, the city adopted an expense budget totaling approximately $115.9 billion. After accounting for estimated revenues from all other sources – including sales taxes, income taxes, state and federal aid – which totaled roughly $80.7 billion, the city faced a budget gap of around $35.2 billion. This gap represents the amount required from property taxes to fulfill the city’s financial obligations.

To ensure actual collections meet this goal, the city considered factors such as uncollectible taxes, refunds, and prior-year collections. As a result, the total property tax levy for fiscal year 2026 was established at approximately $37.98 billion.

The city also confirmed compliance with the constitutional property tax cap, which restricts property tax levies to 2.5% of the average full market value of taxable property over the previous five years. For fiscal year 2026, the levy comfortably adhered to this constitutional limit, thus avoiding potential breaches of state-imposed tax limitations.

Allocating the Levy Across Property Classes

New York City’s properties are divided into four distinct tax classes, generally:

• Class 1: One- to three-family homes
• Class 2: Other residential properties, including condominiums and rental buildings
• Class 3: Utility properties
• Class 4: Commercial and industrial properties

Each year, the city updates how the total levy is distributed across these classes based on changes in market values and physical alterations, such as new construction or demolitions. Initially, current base proportions (CBPs) were calculated based on market conditions as reflected in the 2024 assessment rolls. However, due to state regulations capping annual shifts in property tax burdens between classes at no more than 5%, adjustments were necessary. Specifically, for fiscal year 2026, Class 1 saw an initial increase exceeding this 5% threshold, necessitating the redistribution of some tax burden primarily to Classes 3 and 4.

The final adjusted base proportions (ABPs), accounting for these shifts and recent physical property changes, were set as follows:

Class	ABP	Final Taxable AV	Class‑share of levy (= Levy × ABP)
1	14.8660%	27,365,615,175	5,648,123,631
2	38.8415%	119,539,000,691	14,747,668,054
3	8.2856%	28,313,947,413	3,148,511,986
4	38.0069%	133,962,323,688	14,432,283,573
	100.0000%	309,180,886,967	37,976,587,244

Interim Tax Rates and Pending Legislative Changes

Based on these established ABPs, the city has set provisional property tax rates required to meet the total levy for tax year 2025/26:

• Class 1 (One- to three-family homes):                       20.630%
• Class 2 (Other residential properties):                      12.340%
• Class 3 (Utility properties):                                           11.114%
• Class 4 (Commercial/Industrial properties):           10.774%

However, these rates may change pending state legislative action, specifically Assembly Bill A08629 (S07980), which I wrote about here: Proposed Albany Bill Would Let NYC Choose a Lower Class Share Cap for FY 2026 | Rosenberg & Estis, P.C. This bill has passed the State Legislature and is currently awaiting the Governor’s signature. This legislation would permit the New York City Council to lower the maximum allowable annual shift in property tax burdens among classes below the existing 5% cap. Such legislation is intended to further adjust class proportions and lower tax increases for Class 1 homeowners.

Should this legislation become law, the City Council will likely revise the tax rates accordingly. Property owners are advised to treat these current rates as preliminary, recognizing they could change following anticipated legislative developments. However, if left unchanged, the tax class 4 tax rate would be the highest in 20 years.

See for example last year’s 2024/25 final tax rate changes: New York City Council Approves Property Tax Rates for Fiscal Year 2024/25 | Rosenberg & Estis, P.C.