Overview
New York State Governor Kathy Hochul has signed a fiscal measure that adds a progressive surcharge on luxury second homes in New York City, commonly called a "pied-a-terre" tax - a French phrase meaning "foot on the ground." The surcharge is expected to generate roughly $500 million annually for the city, according to a summary of the enacted budget that state legislators approved late on Wednesday.
Political context and reactions
The inclusion of the surcharge represents a notable alignment between the governor and New York City Mayor Zohran Mamdani. Mamdani supports the levy as part of his agenda to close the city's budget gap. The plan drew public criticism from wealthy individuals including Ken Griffin, Bill Ackman and Kevin O’Leary. Mayor Mamdani specifically pointed to Ken Griffin’s $238 million condominium overlooking Central Park as a potential example of property the tax would affect.
Hochul, who previously opposed tax increases aimed at funding some of Mamdani’s campaign priorities - including a proposal described as "taxing the rich" to assist ordinary New Yorkers - expressed support for the levy. On her Facebook account last month she wrote: "If you can afford a multi-million dollar second home in New York City, you can afford to join its residents in supporting the greatest city in the world."
Structure and timing of the surcharge
The budget sets out a phased schedule for the surcharge rates. In the first two fiscal years, 2026-2028, the rates for houses with market values will be:
- $5 million to $15 million - 0.8%
- $15 million to $25 million - 1.05%
- More than $25 million - 1.3%
During the same initial period, surcharge rates for apartments, based on market value tiers, will be:
- $1 million to $3 million - 4%
- $3 million to $5 million - 5.25%
- Over $5 million - 6.5%
Beginning in fiscal year 2028, the budget calls for apartment surcharge rates to be reduced to the same levels applied to houses, aligning the two categories going forward.
Assessment review and exemptions
The budget also instructs the city’s tax commission to review and correct real property assessments. Under current city law, assessed values are understood to be understated relative to market sale prices; the budget directs adjustment to reflect market values more accurately for taxation.
The surcharge will not apply to properties deemed primary residences. The budget specifies that a property is considered a primary residence if it is occupied by one of the owners, members of their immediate family - including spouses, parents, children, siblings, grandparents and grandchildren - or by tenants.
Implications
Supporters view the surcharge as a revenue source to help close New York City’s budget shortfall. Opponents, including the high-net-worth individuals named, have criticized the plan, and the measure has become a focal point in debates over taxation of wealthy property owners and how assessments are calculated for tax purposes.
Note: This article reflects information contained in the enacted state budget and public statements cited in the budget summary and public remarks.