NYC property tax reform refers to a set of recommendations published in December 2021 by a city advisory commission that would restructure how homes, co-ops, condos, and small rental buildings are classified, valued, and taxed. As of 2026, none of those recommendations have been enacted. Any change requires action by the New York State Legislature, and the political math has kept the proposals stalled. If reform does pass, it would make bills more closely track actual market values, add new relief programs for owner-occupants, and phase changes in over five years. Some homeowners would pay less. Others would pay more.
Why Bills Are So Uneven Today
New York State divided NYC real property into four tax classes in the early 1980s under Real Property Tax Law Section 1802. Class 1 covers one-to-three-family homes. Class 2 covers other residential property, including co-ops, condos, and rental buildings. Class 3 covers utilities. Class 4 covers commercial and industrial.1New York State Senate. New York Real Property Tax Code 1802 – Classification of Real Property in a Special Assessing Unit
Fiscal year 2026 rates look backward at first glance: Class 1 is 19.843%, Class 2 is 12.439%, Class 3 is 11.108%, and Class 4 is 10.848%.2NYC.gov. Property Tax Rates The small-house rate is the highest. What matters is the assessed value the rate gets applied to, and that’s where the system breaks.
State law caps how fast the assessed value of a Class 1 home can rise: no more than 6% in a year and no more than 20% over five years, no matter how much the market value actually climbed.3Office of the New York City Comptroller. Fiscal Note – Implications of Lowering the Class 1 Assessment Ratio In neighborhoods where values exploded, assessed values barely moved, so the high nominal rate hits a small base and produces a low effective rate. In neighborhoods where values stayed flat, the assessed value sits close to market value and the same rate takes a much bigger bite.
The practical result: homeowners in Staten Island, Southeast Queens, Eastern Brooklyn, and the Northeast Bronx pay roughly three times the effective rate paid by homeowners in Manhattan and brownstone Brooklyn, even on homes worth far less. A Park Slope brownstone that tripled in value gets the biggest subsidy from the caps. A comparable home in a neighborhood with flat appreciation gets none.4Office of the New York City Comptroller. Property Tax Reform
Co-ops and condos have a separate problem. They function as owner-occupied homes but sit in Class 2, where they’re valued by an income method designed for rental buildings rather than by what comparable units actually sell for. Assessed values often bear little resemblance to real sale prices.
What the Advisory Commission Recommended
Mayor de Blasio created the New York City Advisory Commission on Property Tax Reform in May 2018 and charged it with making the system fairer, simpler, and more transparent without reducing total city revenue.5The City of New York. About the Property Tax Reform Commission The final report landed in December 2021.
The commission kept four classes but reorganized them. A new residential class would pull together one-to-three-family homes, co-ops, condos, and small rentals of four to ten units. The remaining three classes would cover rentals of more than ten units, utilities, and commercial property.6New York City Advisory Commission on Property Tax Reform. The Road to Reform – A Blueprint for Modernizing and Simplifying New York City’s Property Tax System This is the central change, because it finally subjects co-op and condo owners to the same valuation rules as house owners.
Market Value Assessment
Properties in the new residential class would be valued using actual comparable sales data instead of fractional assessments or income modeling. For a house owner, this makes the bill legible: your assessed value would reflect what your home would sell for. For a co-op or condo owner, the shift is larger. Where sale prices currently exceed the income-based valuation, assessed values would rise. Where the opposite is true, they could fall.
Phased-In Changes Instead of Caps
The 6% annual and 20% five-year assessment caps would go away for properties in the new residential class. Market value changes would instead phase in at 20% per year over five years.6New York City Advisory Commission on Property Tax Reform. The Road to Reform – A Blueprint for Modernizing and Simplifying New York City’s Property Tax System A $100,000 jump in market value would add $20,000 to taxable assessment in year one, with the rest rolling in over the next four years. The transition to the entire new system would also run over five years.
The current caps never let assessed values catch up to market, which is how the gap between wealthy and working-class neighborhoods widens every year. Phasing lets values catch up while smoothing the shock.
Relief Programs Built Into the Proposal
Homestead Exemption
The commission proposed a homestead exemption for all owner-occupied primary residences in the new residential class, exempting a portion of market value from taxation. The report offered two versions: a flat exemption applied equally to all eligible homes, or a graduated version with larger benefits for lower-value properties. Either way, properties that don’t qualify (investor-owned units, rental buildings) would see a slight increase in the overall rate.
The exemption draws a line that doesn’t exist today: a condo owner living in the unit pays less than an investor who bought an identical unit to rent out.
Circuit Breaker Credit
A circuit breaker would protect homeowners whose bills become unaffordable relative to their income. Legislation introduced in the State Senate uses a tiered formula based on household gross income.7New York State Senate. New York State Senate Bill 2025-S1147 For households under $100,000, property taxes above 2% of gross income count as excessive and the credit covers 15% of the excess. From $100,000 to $150,000, the threshold is 2.5% with a 10% credit. From $150,000 to $200,000, the threshold is 3% with a 5% credit. At $200,000 or more, no credit.
Those thresholds are far more generous than the existing PT AID circuit breaker payment plan, which uses a flat 10% of adjusted gross income.8NYC Department of Finance. PT AID Circuit Breaker Plan Calculator The proposed version would reach many more middle-income homeowners, which matters most in neighborhoods where reform-driven assessments could lift bills.
What You Can Do While Reform Stalls
Several existing programs already reduce bills. The STAR program (School Tax Relief) cuts the school tax portion of the bill. Owners receiving the STAR exemption continuously since 2015 can keep it on the same primary residence; newer owners get the STAR credit as a check.
The Senior Citizen Homeowners’ Exemption (SCHE) and Disabled Homeowners’ Exemption (DHE) reduce assessed value on a sliding income scale. For DHE, household income must be $58,399 or less, with reductions ranging from 5% at the top of that range to 50% at or below $50,000.9NYC Department of Finance. Disabled Homeowners’ Exemption (DHE) Both require annual renewal by March 15. If you qualify for both, you receive SCHE.
You can also challenge your assessment. The New York City Tax Commission is an independent agency that hears appeals and can reduce assessed value, change tax class, or adjust exemptions.10NYC.gov. Challenge Your Assessment Class 1 owners file by March 15. Classes 2, 3, and 4 file by March 1. Late filings aren’t heard. Review your Notice of Property Value, which the city mails each January. If the notice shows an effective market value, you’ll need to show that actual market value is lower. A separate Request for Review to the Department of Finance can fix factual errors in the property’s description, but it doesn’t substitute for a formal Tax Commission appeal.
Why Reform Keeps Stalling
The city cannot change its own property tax system. The New York State Constitution requires a special law from the state legislature to affect NYC’s property, affairs, or government. For NYC specifically, the trigger is either a request from two-thirds of the City Council or a request from the mayor with majority Council concurrence.11Justia Law. New York Constitution Article IX – Local Governments – Section 2 The Council sends a Home Rule Message to Albany; the Assembly and Senate vote; the governor signs.
Every major interest group in the city has a reason to lobby Albany. Homeowners in rapidly appreciating neighborhoods want to keep their caps. Co-op and condo owners want fairer valuations. Landlords of large rental buildings worry about costs flowing through to tenants. Commercial property owners resist any rebalancing that shifts weight onto them.
Where Things Stand in 2026
The December 2021 recommendations remain unimplemented. The Comptroller’s office continues to call on the state legislature to act.4Office of the New York City Comptroller. Property Tax Reform In March 2025, a bill was introduced in the State Assembly to create a temporary state commission on NYC property tax reform with thirteen members appointed by the governor, legislative leaders, the City Council speaker, and city officials.12New York State Assembly. Bill A07061 – Temporary State Commission on New York City Property Tax Reform A proposal for another commission rather than a vote on the existing recommendations signals how hard the politics remain.
Any reform is designed to be revenue-neutral, meaning the city collects the same total amount. Revenue-neutral is not bill-neutral. Owners who benefit most from assessment caps and outdated valuations would pay more. Owners who’ve been overpaying relative to market value would pay less. That redistribution is the point of reform, and it’s also why reform keeps stalling.