When Zohran Mamdani was elected Mayor of New York City, proposals for increased revenue to fund progressive reforms and social service enhancements were anticipated. Tax increases affecting wealthier New Yorkers, corporations, and high earners were among those proposed.
Many revenue-generating decisions rest at the state level, and Governor Kathy Hochul has shown reluctance to endorse some of Mayor Mamdani’s initial tax proposals, including a wealth tax and increases to personal and corporate income taxes. A proposed corporate tax increase to 22% would position New York as having the highest rate in the nation. In response to this hesitation, Mayor Mamdani indicated that a 9.5% increase to NYC property taxes may be necessary.
The mayor’s office has recently put forward a series of “revenue raiser” proposals. While many of these policies require action at the state level, they have raised concerns among New York taxpayers.
The Estate Tax Proposal
New York currently has its own estate tax, in addition to the federal estate tax. Under current law, estates valued at or below $7,350,000 in 2026 are exempt from New York State estate taxes. Mayor Mamdani is urging lawmakers to reduce the exemption to $750,000 – an almost 90% reduction – and raise the top estate tax rate from 16% to 50%.
This change would significantly expand the number of New Yorkers subject to state estate taxes and increase the tax burden on many families. A New York City primary residence can exceed $750,000 in value, even before considering retirement accounts and other assets.
The proposal is considered aggressive compared to other states, many of which have no estate tax. It could also lead to distressed sales of residential real estate as families struggle to pay the tax, typically due within nine months of death.
For example, if Mary passes away owning a two-family house in Queens valued at $1.25 million, a retirement account with $200,000, and bank accounts totaling $50,000, her estate would owe $375,000 in New York estate tax under the proposed rules. After taxes, liquidating the retirement account would yield approximately $135,000, plus $50,000 in bank accounts, leaving a $200,000 shortfall.
Another example is Steven, whose estate is valued at $12 million. While his estate does not meet the threshold for federal estate taxes (which commence after $15 million), it would currently owe approximately $1.35 million in New York estate tax. Under the new proposal, Steven’s heirs would owe more than $5.6 million in New York estate taxes.
Other Proposals
Beyond estate taxes, several other revenue-raising proposals have been discussed, including:
- For real estate investors and property owners: a 1% annual surcharge on residential property valued at $5 million or more; a 1% transfer tax on cash real property transactions over $1 million; and mansion taxes on properties valued over $5 million. For example, a $6 million cash purchase could incur a $60,000 annual surcharge and a $135,000 mansion tax.
- For high earning individuals: increasing the personal income tax rate by 2% for filers earning $1 million or more annually and adding a state surcharge on capital gains income over $500,000 per year.
- For business owners: increasing corporate taxes for financial and non-financial sectors, increasing the Unincorporated Business Tax (UBT) by 0.4%, and reducing the New York Passthrough Entity Tax (PTET) credit to 75%.
Mayor Mamdani and other elected Democrats have expressed support for these proposals. While Governor Hochul may be unlikely to endorse them, especially during an election year, some policies could gain traction during the mayor’s term. These tax policies could drive high-value taxpayers and business owners out of New York, with significant economic consequences. Taxpayers are advised to consider estate tax planning strategies.
Frequently Asked Questions
What is the current New York State estate tax exemption?
Under current New York law, an estate valued at or below $7,350,000 in 2026 would generally not be subject to New York State estate taxes.
What is the proposed change to the corporate tax rate?
The proposed corporate tax increase would raise the rate to 22%, making New York the highest in the nation.
What is the Passthrough Entity Tax (PTET) credit?
The PTET credit is a strategy used by business owners to work around the federal limitation on the deductibility of state and local taxes (SALT).
How might these proposed tax changes affect New York’s economic future?
