New York is expected to impose a new tax on luxurious second homes in New York City under a tentative budget agreement that Gov. Kathy Hochul announced, but it is not expected to include a broader state income tax increase on the wealthy, according to a report by the Associated Press. The proposal is aimed at owners who buy high-end apartments or townhouses in the city yet live most of the year elsewhere, and it would focus on so-called pied-à-terres.
The pied-à-terre tax is part of a larger budget plan Hochul rolled out Thursday, as Democrats look for ways to address affordability concerns ahead of this year’s midterm elections. At the same time, the plan is shaped by political pressure to avoid alienating New York’s business community, which has warned against new taxes targeting wealthy people who keep apartments or homes in the city without treating them as their primary residence.
Hochul said the proposed tax would apply to homes valued over $5 million and would cover pied-à-terres in New York City only, not other wealthy second-home regions within the state. She estimated the proposal would generate at least $500 million for New York City annually.
After Hochul’s announcement, New York’s legislative leaders cautioned that negotiations were continuing. Carl Heastie, the Democratic speaker of the state Assembly, warned that key financial details still had to be worked out, saying, “There is no budget deal,” and adding that much of the financial backbone of the budget had yet to be decided.
The proposal also reflects internal tension between Hochul’s approach and Mayor Zohran Mamdani’s political strategy. Mamdani cast the pied-à-terre tax as a victory while continuing to press for more targeted tax hikes on the state’s very wealthy.
Meanwhile, the New York City chapter of the Democratic Socialists of America, which lists Mamdani as a member, criticized the budget direction in messages sent to supporters. Gustavo Gordillo, the organization’s co-chair, said in a statement that “Hochul is trying to shove a deal down our throats with no new taxes on the rich besides the pied-a-terre tax, which only fills 10% of NYC’s deficit,” and argued the proposal would not close the city’s multibillion-dollar budget gap or fund needed social programs.
Hochul, who is running for reelection, has argued against broader statewide tax increases on the rich. She has said that raising statewide taxes would risk encouraging wealthy residents and businesses to flee to lower-tax states, contrasting the limited pied-à-terre measure with a wider set of tax changes.
Mamdani’s campaign messaging on the tax has included direct personal references to wealthy investors. Last month, the mayor posted a video on social media showing him outside a luxury building where hedge fund CEO Ken Griffin bought a penthouse for about $239 million, and he said in the clip that his administration would “tax the rich.” Mamdani later referenced Griffin by name in the video, which has been viewed more than 52 million times.
Griffin later said he was shocked by the video and called it “frightening,” according to the AP report, adding that it could potentially threaten his safety. He also linked the conversation to an unrelated high-profile killing in the same neighborhood, saying CEO of UnitedHealthcare Brian Thompson had been shot to death, and Griffin said his company planned to expand its operations in Miami while reiterating that New York’s political direction was a concern for his business partners.