In announcing his budget, New York City Mayor Zohran Mamdani also gave an ultimatum to Albany: Raise taxes on the wealthiest New Yorkers, or he’ll be forced to increase property taxes for everyone.
It’s a threat that lands at an especially fraught moment. Across the country, lawmakers are pitching property tax cuts—and in some states, even flirting with abolition. A broad property tax increase is politically combustible, even for a mayor who championed higher taxes on top earners to fund relief for the working class.
Facing a two-year gap of $5.4 billion and a legal requirement to balance the budget, Mamdani cast the property tax option as a fiscal fallback, not a policy preference.
“There are two paths to bridge the city’s inherited budget gap. The first path is the most sustainable and fairest: raising taxes on the wealthiest and corporations, and ending the drain by fixing the imbalance between what the city provides the state and what we receive in return,” the mayor said in his budget presentation.
“If we do not go down the first path, the city will be forced to go down a second, more harmful path of property taxes and raiding our reserves—weakening our long-term fiscal footing and placing the onus for resolving this crisis on the backs of working- and middle-class New Yorkers.”
But while homeowners may look like the immediate target, they’re unlikely to be the only ones who pay. In a city with a brutally tight rental market, renters are likely to feel the fallout just as fast.
How much would the tax hike be?
New York City’s property tax system has long been criticized as opaque, inequitable, and difficult to navigate—a problem Mamdani himself has acknowledged, pledging reform in his inaugural address.
That complexity also means a citywide property tax increase would not land evenly. The impact would vary by property class, borough, and building type, with different consequences for homeowners, landlords, and tenants.
Still, city finance data offers a useful baseline for estimating the scale of the increase.
Based on an analysis of the New York City Department of Finance’s FY27 Statistical Summary, rental properties across the five boroughs are currently taxed at an average effective rate of roughly 12.4%. If that rate were increased by 9.5% across the board as Mamdani has floated, the average effective tax rate on rental properties would rise to about 13.6%.
That’s an increase of roughly 1.19 percentage points on average, and a meaningful jump in actual carrying costs for rental housing. Based on the estimated average property tax per rental unit of $5,886, a 9.5% rate increase would push that figure to roughly $6,445 per unit.
While the citywide estimate doesn’t capture every renter’s actual exposure, it helps illustrate the pressure landlords could face: a roughly $560 per-unit increase, multiplied across dozens of apartments, even as only a portion of leases come up for renewal in any given year.
For renters, that could mean higher prices
That mismatch can create a strong incentive—or, for some owners, a financial necessity—to push at least part of the added cost onto the tenants unlucky enough to be negotiating a new lease.
“For New Yorkers preparing to move or renew a lease in 2026, the proposed 9.5% property tax hike functions as a ‘hidden rent’ that could drive up costs,” explains Jiayi Xy, an economist at Realtor.com®.
“In market-rate units, landlords could pass this tax burden directly to tenants through higher renewal asks and increased listing prices,” she adds. The risk comes at a time when the city’s rental market is buckling under years of sustained pressure.
Rents are up 6.6% across the city compared with one year ago, according to data from Realtor.com, and vacancy rates remain at a historic low of 1.4%.
With few units available and prohibitively high moving costs, many renters are opting to stay put rather than brave the market. Nearly 90% of renters stayed put last year—well above national and peer-market levels—leaving few units available for new renters and putting more pressure on the units that do come up.
City Hall is trying to ease that squeeze by building 200,000 affordable units over the next decade while reinvesting in the city’s existing stock. But even if those efforts succeed, supply gains will take years to meaningfully reshape the market.
In Austin, TX, where homebuilding was already climbing before the pandemic and accelerated sharply during it, it took a three-year window for that wave of new units to materially show up in asking rents and list prices, according to research from Realtor.com.
A property tax increase, by contrast, would likely be felt much sooner—leaving renters to navigate a market where landlords still hold the pricing power, and higher ownership costs can add to upward rent pressure.
Even rent-regulated apartments could feel the pressure. While limits on rent increases can blunt immediate tax-driven rent hikes, Xu says the added financial strain can still show up in other ways.
“While legal caps prevent immediate tax-related rent spikes, the financial pressure is leading many owners to reduce building services and maintenance to balance their books,” she says. And with vacancy rates below 1% for these units, renters are left with even fewer comparable options than their market-rate counterparts.
That pressure is likely to drive demand in the city’s last remaining (relatively) affordable boroughs, says Xu.
“This has made the relatively affordable markets of Queens and The Bronx—where median rents remain below citywide—highly ‘attractive choices,’” she adds. “However, this influx of new demand, coupled with the rising tax rate, is expected to cause rents in these two boroughs to grow at a faster pace than the rest of the city this year.”
So while the bill would land first on landlords, renters are likely to feel it next.
That’s part of why Mamdani is pressing Albany to raise taxes on the city’s wealthiest residents. But for now, a property tax hike appears to be the option of last resort—and the only one immediately within reach.