Property Tax in NYC: Classes, Assessments, and Exemptions

NYC property tax is calculated by multiplying your property’s assessed value by the tax rate set each year for your property class, with assessed value equal to the city’s estimated market value times a fixed assessment ratio (6% for most one- to three-family homes, 45% for larger residential and commercial buildings). For the 2026 tax year, class rates run from 10.848% to 19.843%, and several exemptions can cut what you actually owe if you apply by the city’s deadlines.¹

What Class Your Property Is In

Classification drives almost everything about your bill. The Department of Finance sorts every taxable parcel into one of four classes:

Class 1: most residential property with up to three units, including single-family homes, small mixed-use buildings with one or two apartments above a store, and condominiums of three stories or fewer.
Class 2: all other primarily residential property, including rental buildings with four or more units, cooperatives, and larger condominium complexes. Smaller Class 2 buildings (10 or fewer units) sit in sub-classes 2a, 2b, and 2c with their own assessment caps.
Class 3: regulated utility equipment such as power plants, cell towers, and power lines.
Class 4: everything else, mainly commercial and industrial property, from corner retail to Manhattan office towers.²

If a property doesn’t fit Classes 1, 2, or 3, it defaults to Class 4.

How Assessed Value Is Calculated

The Department of Finance first estimates your property’s market value, meaning what it would likely sell for on the open market. That figure gets multiplied by an assessment ratio to produce your assessed value. For Class 1 the ratio is 6%; for Classes 2, 3, and 4 it jumps to 45%.³

So a Class 1 home with a market value of $500,000 has an assessed value of $30,000. A Class 4 commercial building worth the same $500,000 is assessed at $225,000. The lopsided assessment ratios are the reason Class 1 can carry the highest nominal rate while homeowners still pay less in absolute dollars than owners of commercial property of comparable market value.

Caps on How Fast Assessments Can Rise

State law limits year-to-year assessment growth for smaller properties. Class 1 assessed values can rise no more than 6% in one year or 20% over five years. Class 2a, 2b, and 2c properties (buildings with 10 or fewer units) are capped at 8% a year and 30% over five years. These caps apply only to assessed value; the city’s market value estimate can still move sharply.³

Larger buildings get different protection. Class 2 properties with more than 10 units and all Class 4 properties have assessment changes phased in over five years at 20% a year. When this transitional assessed value is lower than the actual assessed value, the city uses the lower number for your bill.⁴

Current Tax Rates and What a Bill Looks Like

The City Council sets a tax rate for each class every year. For the 2026 tax year:¹

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

Run the math on a Class 1 home with a $700,000 market value. The 6% assessment ratio produces a $42,000 assessed value, and the 19.843% rate yields about $8,334 in annual tax before any exemptions. A Class 4 property with the same $700,000 market value is assessed at $315,000, producing a bill of roughly $34,171.

Your Notice of Property Value and How to Challenge It

Every January, the Department of Finance mails a Notice of Property Value to each owner. It isn’t a bill. It shows the city’s market value estimate, the resulting assessed value, and how both compare to the prior year.⁵ The notice reflects the status of your property as of January 5 and is used to calculate taxes for the fiscal year beginning the following July.⁶

Read it when it arrives. If the market value looks inflated or the classification is wrong, you can file an appeal with the NYC Tax Commission. Deadlines are strict and cannot be extended: March 16 for Class 1 properties and March 2 for Classes 2, 3, and 4.⁷ Appeals fall into four grounds (overvaluation, misclassification, inequality, and unlawfulness), each with its own application form.⁸ For an overvaluation claim, bring recent comparable sales, an independent appraisal, or income and expense records if the property generates rent. The burden is on you.

Exemptions and Abatements That Lower Your Bill

The city runs several programs that reduce property tax, and most homeowners who miss out simply never apply.

Senior Citizen Homeowners’ Exemption (SCHE)

SCHE reduces the assessed value of your home by 5% to 50% on a sliding income scale. You must be at least 65 by December 31 of the year the benefit takes effect, and all owners must use the property as their primary residence. Combined income of all owners and their spouses cannot exceed $58,399. Households earning up to $50,000 get the full 50% reduction; the benefit tapers to 5% between $57,500 and $58,399.⁹

Disabled Homeowners’ Exemption (DHE)

DHE uses the same sliding scale and the same $58,399 income ceiling as SCHE but is available to homeowners with qualifying disabilities regardless of age. The property must be your primary residence.¹⁰

STAR (School Tax Relief)

STAR reduces the school tax portion of your bill. New homeowners register for the STAR credit through New York State, not the city, and the state sends a check or direct deposit. Homeowners who have received the STAR exemption on the same home since 2015 or earlier can continue getting it as a direct reduction on the bill; new applicants can only get the credit. Basic STAR is available with income up to $500,000 for the credit (or $250,000 for the legacy exemption). Enhanced STAR, for homeowners 65 and older, requires income of $110,750 or less.¹¹

Co-op and Condo Tax Abatement

If you own a co-op or condo unit that is your primary residence, your building may qualify for an abatement that cuts your bill by 17.5% to 28.1%, depending on the unit’s average assessed value. For 2026/2027, units assessed at $50,000 or less receive the full 28.1%; those above $60,000 get 17.5%. Individual owners cannot apply directly. The building’s management or board files on behalf of all eligible residents. The filing deadline for 2026/2027 was February 23, 2026; buildings that missed it won’t see benefits until July 1, 2027.¹²

Solar Electric Generating System Abatement

Installing a solar electric generating system that begins service between January 1, 2024, and January 1, 2035, can earn an abatement worth 7.5% of installation cost, applied over four years after Department of Buildings approval. The total benefit cannot exceed your annual property taxes or $62,500, whichever is lower.¹³

How and When to Apply

For SCHE, DHE, and most other homeowner exemptions, the deadline to apply or renew for the 2026/2027 tax year is March 16, 2026. On-time applications take effect July 1, 2026. Miss it and benefits don’t kick in until July 1, 2027.⁹

You can submit applications online through the Department of Finance’s SmartFile system. Create an account, complete the application, and upload supporting documents: proof of identity, proof of age for SCHE, and income documentation such as your most recent federal return. If you aren’t required to file taxes, Social Security award letters or pension statements work as income proof.¹⁴

To file on paper, mail the signed application and copies of supporting documents to:

NYC Department of Finance
Homeowner Tax Benefits
P.O. Box 311
Maplewood, NJ 07040-0311

Use a tracked mailing method. The Department of Finance will send an approval, a denial, or a request for more information, and approved benefits show up on a future tax bill.¹⁵ For STAR, register directly with the state Department of Taxation and Finance rather than the city.¹¹

Bills, Due Dates, and Payment

The property tax fiscal year runs July 1 through June 30. Billing frequency depends on your assessed value:

Assessed value of $250,000 or less: quarterly bills due July 1, October 1, January 1, and April 1.
Assessed value above $250,000: semi-annual bills due July 1 and January 1.¹⁶

Pay through the NYC CityPay portal online. Electronic check payments are free; credit and debit card payments carry a non-refundable 2% convenience fee.¹⁷ You can also mail a check or money order to the Department of Finance’s processing center or pay in person at a Business Center in any borough. Write your property’s borough, block, and lot number on mailed payments so the money lands on the right account.

If your mortgage lender pays the tax through escrow, verify payments actually went through using the Department of Finance’s online property account lookup. Lenders occasionally miss payments, and the consequences fall on you.

Late Payments, Interest, and Tax Lien Sales

Missing a payment triggers interest that compounds daily. There is no flat penalty. For the period from July 1, 2025, through June 30, 2026:¹⁸

Assessed value of $250,000 or less: 6% annual interest.
Assessed value of $250,001 to $450,000: 9% annual interest.
Assessed value above $450,000: 16% annual interest.

If you can’t pay in full, the Department of Finance offers installment plans. A reduced interest rate plan at 2.5% annually is available for owner-occupied Class 1 properties assessed at $250,000 or less, provided household income doesn’t exceed $200,000 and the property isn’t held in trust. Homeowners receiving SCHE, DHE, or Enhanced STAR and current on their plan payments qualify automatically for the reduced rate. Defaulting has teeth: fail to pay both your installment and new charges for six months and the agreement is canceled, and you’ll be locked out of a new plan on that property for five years with limited exceptions.¹⁹

Tax Lien Sales

When you owe enough for long enough, the city sells your debt to an authorized lien buyer. The buyer doesn’t own your property, but they own the right to collect, and the lien can lead to foreclosure if the debt isn’t resolved. For one- to three-family homes, a lien can be sold once you owe at least $5,000 in property taxes for three or more years. For most commercial and other properties, the threshold drops to $1,000 owed for one year. After the sale, the lienholder adds a 5% surcharge on the full lien amount plus interest that compounds daily: 5% annually for properties assessed at $250,000 or less, 18% for properties above that line.²⁰ Those post-sale rates are far worse than ordinary late-payment interest, which is the strongest argument for clearing a delinquent balance before a sale.

Deducting NYC Property Tax on Your Federal Return

NYC property taxes are deductible on your federal return if you itemize, but the state and local tax (SALT) deduction is capped. For the 2026 tax year, the maximum SALT deduction is $40,400 for most filers, or $20,200 for married filing separately. The cap covers combined state and local income taxes (or sales taxes) plus property taxes, so if your New York State income tax alone approaches $40,400, additional property tax may bring no further federal benefit. The $40,400 cap phases down for high earners and is scheduled to drop back to $10,000 for tax years beginning after 2029.²¹

1
NYC Department of Finance. Property Tax Rates
2
NYC Department of Finance. Definitions of Property Assessment Terms
3
NYC Department of Finance. Determining Your Assessed Value
4
NYC Department of Finance. Determining Your Transitional Assessed Value
5
NYC Department of Finance. Notice of Property Value
6
NYC311. Property Value and Assessment
7
NYC Tax Commission. NYC Tax Commission
8
NYC Tax Commission. Application Forms
9
NYC311. Senior Citizen Homeowners’ Exemption (SCHE)
10
NYC Department of Finance. Disabled Homeowners’ Exemption (DHE)
11
New York State Department of Taxation and Finance. STAR Eligibility
12
NYC311. Co-Op and Condo Property Tax Abatement
13
NYC Department of Finance. Solar Electric Generating System (SEGS) Tax Abatement
14
NYC311. Property Tax Exemption Assistance
15
NYC Department of Finance. Property Tax Exemption Application Status
16
NYC Department of Finance. Property Tax Due Dates
17
City of New York. CityPay FAQ
18
NYC Department of Finance. Late Payments
19
NYC Department of Finance. Property Payment Plans
20
NYC Department of Finance. Property Tax Lien Sale
21
Office of the Law Revision Counsel. United States Code Title 26 – 164