How Are NYC Property Taxes Calculated: Assessments and Exemptions

New York City calculates your property tax in five steps: it assigns your property to one of four tax classes, estimates its market value, multiplies that market value by a fixed assessment ratio to get an assessed value, subtracts any exemptions you qualify for, and applies the tax rate set for your class. For the 2026 tax year, those rates run from 10.848 percent on most commercial property up to 19.843 percent on small homes.¹ Abatements, if any, come off the tax itself at the end.

Step One: Your Property’s Tax Class

Class controls almost everything downstream — the valuation method, the assessment ratio, the caps that limit year-to-year increases, and the tax rate itself.²

Class 1 covers one- to three-unit residential buildings, including single-family homes, small apartment buildings, and certain condominiums. Most residentially zoned vacant land also sits here.³
Class 2 covers residential property with four or more units: larger apartment buildings, cooperatives, and most condominiums.⁴
Class 3 covers utility company equipment and special franchise property.
Class 4 covers all other commercial and industrial real estate — offices, factories, stores, hotels.

Mixed-use buildings can be split-classified or assigned to the class that reflects the primary use. A storefront with two apartments upstairs is handled differently from a large mixed-use tower.

Step Two: How the City Estimates Market Value

Market value is the Department of Finance’s estimate of what your property would sell for under normal conditions. It appears on the Notice of Property Value mailed to owners each January.⁵ How the city gets to that number depends on your class.

Class 1: Comparable Sales

For small residential properties, the city looks at sale prices of similar homes nearby over the preceding several years, adjusting for size, age, condition, and exact location.³

Class 2 and Class 4: Income-Based Valuation

Larger residential buildings and commercial property are valued by the income they generate, not by comparable sales. State law requires that cooperatives and condominiums be valued as if they were income-producing rental buildings, even when they aren’t rented out.⁴

For buildings of 11 or more units, the city uses actual financials submitted by the owner in the annual Real Property Income and Expense (RPIE) filing. The Department of Finance estimates net operating income from that data and applies a capitalization rate to reach market value.⁶ Smaller Class 2 buildings with 10 or fewer units use a gross income multiplier: the city estimates typical income per square foot from comparable buildings, totals it for the building, and multiplies by a factor.⁴

Step Three: From Market Value to Assessed Value

The city does not tax the full market value. It applies a fixed assessment ratio to get a smaller number, the assessed value, which is the actual base for your tax.

Class 1: 6 percent of market value
Classes 2, 3, and 4: 45 percent of market value

A Class 1 home the city values at $600,000 has an assessed value of $36,000. A Class 4 building valued at $1 million has an assessed value of $450,000.⁷

Caps That Slow Increases on Smaller Properties

State law limits how fast the assessed value can rise on smaller properties, so the raw ratio math is often not what actually appears on your bill. Class 1 assessed value cannot rise by more than 6 percent in one year or 20 percent over five years. Class 2 buildings of 10 or fewer units are capped at 8 percent per year and 30 percent over five years.⁷ One consequence: if the caps held your assessment below the ratio in past years, your assessed value can keep climbing even in a year when market value falls.

Phase-Ins for Larger Properties

Class 2 buildings with 11 or more units and all Class 4 properties do not have those percentage caps. Instead, any change in assessed value is phased in over five years at 20 percent per year. The Department of Finance calculates both an actual assessed value and a transitional assessed value and bills you on whichever is lower.⁸

Step Four: Subtract Exemptions

Exemptions reduce your assessed value before the tax rate is applied. Abatements are different: they come off the tax itself after the rate is applied. Both lower the final bill, but at different points in the math.

STAR (School Tax Relief)

STAR is a benefit for primary residences. New owners register for the STAR credit through New York State; homeowners who have been receiving the STAR exemption since 2015 can continue to receive it on the same residence.⁹ Basic STAR is available to owners of any age with income of $500,000 or less for the credit, or $250,000 or less for the exemption. Enhanced STAR is a larger benefit for owners 65 and older with combined income of $110,750 or less.

Senior Citizen Homeowners’ Exemption (SCHE)

SCHE reduces the assessed value of one- to three-family homes, condos, and co-ops owned by people 65 and older. The reduction is 5 to 50 percent on a sliding income scale, with combined income capped at $58,399. Owners with income of $50,000 or less get the full 50 percent.¹⁰

Disabled Homeowners’ Exemption (DHE)

DHE mirrors SCHE — same 5 to 50 percent sliding scale, same $58,399 income cap — but is for homeowners with qualifying disabilities regardless of age.¹¹ You cannot receive both. If you qualify for both, you receive SCHE.¹⁰

Cooperative and Condominium Abatement

Owners who use a co-op or condo unit as a primary residence may qualify for an abatement of 17.5 to 28.1 percent of the tax owed, scaled by the average assessed value of residential units in the development; units in developments with an average assessed value of $50,000 or less receive the highest percentage. The owner cannot hold more than three units in the development, and units owned by an LLC or other business entity do not qualify.¹²

Application Deadlines

Most exemption and abatement applications are due by mid-March for benefits that take effect the following July 1. For the 2026–2027 tax year, the SCHE and DHE deadline is March 16, 2026.¹³ The co-op and condo abatement deadline for the same year is February 23, 2026.¹² Miss the deadline and you wait an extra year.

Step Five: Apply the Tax Rate

The New York City Council sets a rate for each class every year based on the city budget. For the 2026 tax year:¹

Class 1: 19.843%
Class 2: 12.439%
Class 3: 11.108%
Class 4: 10.848%

The formula is: taxable assessed value (assessed value minus exemptions) multiplied by the class rate. If your Class 1 home has an assessed value of $36,000 and no exemptions, the annual tax is $36,000 × 19.843% = $7,143. Any abatement you qualify for is then subtracted from that tax amount.

When You Pay

The property tax year runs July 1 through June 30. Properties with an assessed value of $250,000 or less are billed quarterly, on July 1, October 1, January 1, and April 1. Properties above $250,000 are billed twice a year, on July 1 and January 1.¹⁴

If You Think the Number Is Wrong

The city’s market value estimate is the most common thing an owner can push back on. Challenges go to the NYC Tax Commission, and deadlines are firm. For the 2026–2027 tax year, Class 1 owners must file by March 16, 2026; other classes must file by March 2, 2026.¹⁵ Class 1 owners use Form TC108; Class 2 and Class 4 owners use Form TC101, and owners of rent-producing property attach an income and expense schedule on Form TC201.¹⁶ A $175 fee applies where the assessed value is $2 million or more, added to the tax bill rather than paid up front.¹⁷

Class 1 homeowners have a second option after the Tax Commission process: a Small Claims Assessment Review petition filed with the county clerk. The filing fee is $25, no attorney is required, and in New York City the petition must be filed before October 25 of the year the assessment was made.¹⁸

1
NYC Department of Finance. Property Tax Rates
2
NYC.gov. Property Tax Rates
3
NYC Department of Finance. Class 1 Property Tax Guide
4
NYC.gov. Class 2 Property Tax Guide
5
NYC.gov. Notice of Property Value
6
NYC Department of Finance. Real Property Income and Expense Filing Information
7
NYC.gov. Determining Your Assessed Value
8
NYC.gov. Determining Your Transitional Assessed Value
9
Department of Taxation and Finance. STAR Eligibility
10
NYC.gov. Senior Citizen Homeowners’ Exemption
11
NYC311. Disabled Homeowners’ Exemption
12
NYC.gov. Cooperative and Condominium Property Tax Abatement
13
NYC311. Senior Citizen Homeowners’ Exemption
14
NYC.gov. Property Tax Due Dates
15
NYC311. Property Value Appeal
16
Tax Commission – NYC.gov. Application Forms
17
NYC.gov. Form TC101 Instructions for 2026
18
Legal Information Institute. 22 NYCRR 202.58 – Small Claims Tax Assessment Review Proceedings