New York City property tax reform has been studied, blueprinted, and litigated, but as of 2026 none of the major changes have been enacted. The city’s Advisory Commission on Property Tax Reform published its final recommendations in December 2021, a state commission bill is sitting in committee, and a court case brought by Tax Equity Now NY is keeping legal pressure on both the city and Albany. In the meantime, the 1981 state law that created the four-class system still governs how your home is valued and taxed, and the only immediate relief comes from programs that sit on top of that older framework.
Why Reform Keeps Coming Up
Two features of the current system drive most of the inequity complaints, and both are what the reform proposals try to fix.
Co-ops and Condos Are Taxed as If They Were Rentals
New York State Real Property Tax Law Section 581 requires the city to assess co-ops and condos as if they were rental apartment buildings rather than owner-occupied units sold on the open market.1New York State Senate. New York Real Property Tax Law 581 – Assessment of Residential Cooperative, Condominium and Rental Property The city looks for comparable rental buildings to estimate the income the co-op or condo would generate as a rental. In neighborhoods full of older rent-regulated buildings, those comparables generate far less income than the units are actually worth on the sales market.2New York City Independent Budget Office. The Coop/Condo Abatement and Residential Property Tax Reform
The Independent Budget Office found that official market values for co-op and condo apartments average only about 20 percent of what they would be if the city used actual sales prices.3New York City Independent Budget Office. Addressing the Disparities: Winners and Losers in Two Property Tax Reform Scenarios The gap is widest in Manhattan, where official values run roughly 75 percent below sales-based values. On the Upper West Side between 59th and 79th Streets, the city’s average assessed market value was $86,296 per unit while the IBO estimated the actual market value at $414,260. The discounts are smaller outside Manhattan but still substantial, ranging from about 64 percent in Brooklyn to 41 percent in the Bronx.2New York City Independent Budget Office. The Coop/Condo Abatement and Residential Property Tax Reform
Assessment Caps Lock In the Gap
State law also limits how fast an assessed value can grow. For Class 1 homes, the cap is 6 percent in any single year and 20 percent over any five-year period. For small Class 2 buildings with fewer than eleven residential units, the limit is 8 percent per year and 30 percent over five years.4FindLaw. New York Real Property Tax Law 1805 – Limitation on Increases of Assessed Value of Individual Parcels The caps were meant to shield owners from sudden spikes, but in rapidly appreciating neighborhoods they create a permanent discount. Owners in Park Slope or Boerum Hill benefit as prices run ahead of assessments, while owners in slower-growing neighborhoods pay a higher effective rate because their assessments were never capped below market value in the first place.3New York City Independent Budget Office. Addressing the Disparities: Winners and Losers in Two Property Tax Reform Scenarios
What the Advisory Commission Proposed
The commission’s final report, “The Road to Reform: A Blueprint for Modernizing and Simplifying New York City’s Property Tax System,” was released on December 29, 2021.5NYC.gov. Final Report – Property Tax Reform It focuses on smaller residential properties and rests on four moves.
A New Consolidated Residential Class
The commission would merge parts of Class 1 and Class 2 into a single residential class covering roughly two million residential units across one million tax parcels, including one- to three-family homes, co-ops, condos, and small rental buildings with ten or fewer units.6Citizens Budget Commission. Testimony on the Recommendations of the NYC Advisory Commission on Property Tax Reform Right now, a three-family house in Class 1 and a condo of similar value in Class 2 can face wildly different effective tax rates. One shared class with a uniform rate ends that split. Larger rental buildings with eleven or more units would stay in a separate class, keeping the new class focused on properties that function as homes rather than investment assets.
Sales-Based Valuations
The city would stop valuing co-ops and condos as hypothetical rentals and use actual sales data instead. When similar units in a building or neighborhood sell, those prices would set the basis for assessing comparable units. This is the change that would close the 20-percent-of-market gap the IBO documented. It also gives owners a benchmark they can understand and challenge: your neighbor’s sale price, rather than a rental-equivalency calculation most owners never see inside of. Assessed values in high-demand areas would almost certainly rise, especially in Manhattan.
A Five-Year Phase-In Instead of Caps
Rather than permanently capping how fast assessed values can rise, the commission would spread any change in market value across five equal annual installments. A $50,000 jump would show up as $10,000 per year for five years. Owners still get protection from a one-year shock, but every property eventually reaches its full market-based assessment, so the discount doesn’t become permanent. The phase-in works in reverse too: if values fall, the reduction phases in over five years.
A Circuit Breaker Tax Credit
Moving to market-based values would push some tax bills up. The commission’s answer is a circuit breaker credit tied to household income: if your property tax exceeds a set percentage of what you earn, a credit covers part of the excess. A pending state bill, Senate Bill S1147, sets the specific thresholds:
- Household income under $100,000: taxes above 2 percent of income count as excess, with a 15 percent credit on that excess
- Income from $100,000 to $149,999: taxes above 2.5 percent of income, with a 10 percent credit on the excess
- Income from $150,000 to $199,999: taxes above 3 percent of income, with a 5 percent credit on the excess
Households earning $200,000 or more would not be eligible.7New York State Senate. New York State Senate Bill 2025-S1147 The bill has been referred to the Budget and Revenue committee and has not advanced further as of early 2026.
Where Reform Actually Stands in 2026
None of the commission’s major recommendations have been enacted. The city cannot fix this on its own: the rules that classify, value, and cap properties live in state law, and changing them requires the state legislature to amend the Real Property Tax Law.8New York State Senate. New York Real Property Tax Law Article 18 – Preservation of Class Share of Taxes and Limitation on Increases in Assessments The City Council can adjust rates within the existing framework, but it cannot create a new property class or change how assessments are calculated.
In March 2025, the Assembly introduced Bill A07061 to create a temporary state commission on NYC property tax reform. The bill requires the mayor to submit a reform plan by August 31, 2025, and the commission to issue legislative recommendations by December 31, 2025.9New York State Assembly. New York State Assembly Bill A07061 As of early 2026, that bill was still in the Committee on Real Property Taxation.
The court case is where the pressure is building. On March 19, 2024, the New York Court of Appeals ruled that Tax Equity Now NY can move forward with its challenge to the legality of the city’s property tax system. TENNY argues the current system violates equal protection principles by taxing similar properties at drastically different rates depending on classification. If the courts eventually agree, the legislature may be forced to act regardless of the political calendar.
What You Can Do About Your Taxes Now
Reform is years away at best. These programs are available today.
STAR and Enhanced STAR
The School Tax Relief credit goes to homeowners who use the property as their primary residence. Basic STAR is worth about $293 per year and is available to households with combined income of $500,000 or less. Enhanced STAR, for owners 65 and older with income of $110,750 or less, is worth roughly $650 per year. New applicants receive STAR as a check or direct credit rather than an exemption on the tax bill.10NYC311. School Tax Relief for Homeowners (STAR)
Senior Citizen and Disabled Homeowners’ Exemptions
If you’re 65 or older and your combined household income is $58,399 or less, the SCHE program reduces your assessed value by 5 to 50 percent depending on income. The full 50 percent reduction applies to incomes under $50,000, phasing down in roughly $1,000 income increments to 5 percent at the top of the eligible range.11NYC311. Senior Citizen Homeowners’ Exemption (SCHE) The Disabled Homeowners’ Exemption uses the same income thresholds and reduction schedule.
Co-op and Condo Abatement
Owners of a co-op or condo used as a primary residence may qualify for an abatement reducing property taxes by 17.5 to 28.1 percent, depending on the average assessed value of units in the building. Buildings where the average unit is assessed at $50,000 or less get the highest percentage. The abatement requires an annual application by February 15, and the unit must have been purchased on or before January 5 of the year in question. Buildings with 30 or more units and average assessed values over $60,000 per unit must also file a prevailing wage affidavit, or the entire building loses the abatement for that tax year.12NYC Department of Finance. Cooperative and Condominium Property Tax Abatement
Challenging Your Assessment
If you think the city has overvalued your property, file an Application for Correction with the NYC Tax Commission. The deadlines are firm: March 15 for Class 1 properties and March 1 for Class 2, 3, and 4 properties. If you receive a revised notice after February 1 that increases your assessed value, you have 20 calendar days from the date of that notice to file.13NYC Tax Commission. Challenging Notice of Property Valuation The form you use depends on property type (TC108 for Class 1, TC101 for most Class 2 and 4 buildings, TC109 for individual condo units). Income-producing properties must also submit a statement of income and expenses, and properties assessed at $5 million or more need an accountant’s certification on Form TC309. If the commission doesn’t resolve the dispute, the next step is an Article 7 proceeding in state court.
How Reform Would Interact With the SALT Deduction
The federal state and local tax deduction cap rose from $10,000 to $40,000 starting in 2025, with a $20,000 limit for married couples filing separately. The deduction cannot drop below $10,000 regardless of income, but it phases out for filers above a certain modified adjusted gross income threshold, and the cap is indexed for inflation.14Internal Revenue Service. Topic No. 503 – Deductible Taxes Many co-op and condo owners currently pay low enough property taxes to deduct the full amount. If reform raises their assessments to match market values, some will find their combined property and income taxes push past the deduction limit, which makes the after-tax impact of any assessment increase larger than the sticker number suggests.