New York City’s property tax system shapes housing affordability, neighborhood stability, and economic equity across every borough. New data from the FY25 and FY26 assessment rolls show a recovering real estate market — but also reveal long-standing structural imbalances in how different property types are taxed and who carries the burden.
As market values rise, it is critical to understand how NYC’s four property classes work, how taxes are calculated, and how these trends affect homeowners, renters, and communities.
year
2026
policy
Property Taxes
category
Property Owners + Tennants
NYC Property Tax Classes Explained
NYC divides all taxable property into four classes:
Class 1 – One-, two-, and three-family homes, small condos, and some vacant land
Class 2 – All other residential property, including rentals, co-ops, condos, and apartment buildings
Class 3 – Utility property owned by regulated utilities (excluding land/buildings)
Class 4 – Commercial property: offices, hotels, retail, factories, warehouses, and utility land/buildings
These classifications are not just administrative — they determine assessment ratios, tax rates, caps on increases, and ultimately who pays the most.
A Market in Recovery — But Unevenly
According to the FY26 Tentative Tax Roll released by the New York City Department of Finance, NYC’s total property market value rose 5.7% year-over-year to $1.579 trillion, a sharp rebound from near-flat growth the year before.
Key Trends:
Residential Growth
Class 1 (1–3 family homes): +5.8% citywide
Staten Island led growth at +7.8%
Class 2 (rentals, co-ops, condos): +7.3%
Brooklyn led at +9.4%
Commercial Recovery
Class 4 (commercial): +3.8% overall
Office buildings: +2.7%
Hotels: +6.5%
Commercial condos: +7.5%
Brooklyn emerged as the strongest-performing borough across multiple property classes, reflecting sustained demand and development pressure.
Market Value vs. What Gets Taxed
Not all property is taxed equally — or even close.
Class 1 properties hold the largest share of total market value citywide:
Class 1 market value: $738.5 billion
Assessment ratio: only 6% of market value
Annual assessment growth cap: 6%
This means Class 1 homes represent massive market wealth, but a much smaller share of the taxable base.
Brooklyn Example:
In Brooklyn alone:
Class 1 properties account for over 67% of borough market value
$289.1B of $429.9B total market value
Yet their taxable contribution remains structurally limited due to caps and assessment rules.
Structural Imbalance in Tax Rates
NYC’s tax system creates built-in disparities:
Class 1 (small homes):
Highest tax rate percentage (~20%)
But applied to only 6% of market value
Class 4 (commercial):
Lower tax rate percentage (~10–11%)
But applied to 45% of market value
Produces a massive share of total city revenue
Result:
Small homeowners see high visible tax rates, while large commercial assets generate enormous revenue due to higher assessment ratios — even at lower nominal rates.
Where the Tax Burden Actually Falls
Share of NYC Tax Levy:
Class 2 (rentals, co-ops, condos): 39.1%
Class 4 (commercial): 38.5%
Class 1 (small homes): growing share of levy (+14.3% increase)
This means renters and multifamily housing systems now carry the largest portion of the city’s tax burden, despite affordability pressures.
Warning Signs: Delinquencies Rising
Citywide tax delinquency rate rose to 2.34%
Office building delinquencies increased 43%
Commercial condo delinquencies increased 50%
This signals growing financial stress in the commercial sector — even amid market recovery.
What This Means for NYC
The data tells a clear story:
✔ The real estate market is recovering
✔ Residential values are rising fast
✔ Brooklyn is leading growth
❌ Tax burdens remain structurally unequal
❌ Renters and multifamily housing absorb the largest share of the levy
❌ Assessment rules protect wealthier property classes
❌ Delinquencies are rising in commercial sectors
New York now ranks 50th in the nation for business tax climate (Tax Foundation, 2025), has the highest individual income tax rates in the country, and the second-highest property tax burden nationwide. The state is also subject to over 300,000 regulatory restrictions—second only to California (Mercatus Center, 2024)—a regulatory and tax environment that is increasingly pushing employers, small businesses, and working families out of New York.
NYC’s property tax system is not just outdated — it actively reinforces inequality between homeowners, renters, and corporate property owners.
Action Steps for Property Owners & Communities
Verify your property valuation on the NYC Department of Finance website
Challenge inaccurate assessments before the March 1 filing deadline
Educate tenants and homeowners about how taxes impact rent, affordability, and displacement
Advocate for structural reform of the property tax class system, not just rate adjustments
Market and Assessed Value of Taxable Properties by Property Type — Citywide
Property Type | Parcel | Residential Units or Area | MV ($ millions) | MV (% of Total) | TAV ACTUAL ($ millions) | TAV ACTUAL (% of Total) | TAV BILLABLE $ millions) | TAV BILLABLE (% of Total) |
TOTAL | 1,105,509 | 1,493,902.8 | 100.00 | 314,982.0 | 100.00 | 299,431.6 | 100.00 | |
Class 1 | 698,463 | 1,096,828 | 738,510.3 | 49.43 | 25,834.4 | 8.20 | 25,834.4 | 8.63 |
Class 2 | 305,738 | 2,018,535 | 369,474.2 | 24.73 | 120,909.7 | 38.39 | 115,179.6 | 38.47 |
Class 3 | 354 | 58,972.1 | 3.95 | 26,402.1 | 8.38 | 26,402.1 | 8.82 | |
Class 4 | 100,954 | 1,114.5 | 326,946.2 | 21.89 | 141,835.8 | 45.03 | 132,015.4 | 44.09 |
Market and Assessed Value of Taxable Properties by Property Type — Brooklyn
Property Type | Parcel | Residential Units or Area | MV ($ millions) | MV (% of Total) | TAV ACTUAL ($ millions) | TAV ACTUAL (% of Total) | TAV BILLABLE $ millions) | TAV BILLABLE (% of Total) |
TOTAL | 340,600 | 429,919.3 | 100.00 | 49,889.9 | 100.00 | 46,613.4 | 100.00 | |
Class 1 | 214,071 | 382,161 | 289,132.3 | 67.25 | 7,876.2 | 15.79 | 7,876.2 | 16.90 |
Class 2 | 91,695 | 558,680 | 89,453.1 | 20.81 | 20,364.8 | 40.82 | 18,996.2 | 40.75 |
Class 3 | 68 | 12,529.8 | 2.91 | 56.26.8 | 11.28 | 5,626.8 | 12.07 | |
Class 4 | 34,766 | 203.6 | 38.814.1 | 9.03 | 16.022.0 | 32.11 | 14,114.2 | 30.28 |
HL
Executive Director
A fair tax system is not just about revenue — it’s about equity, housing stability, and who NYC chooses to protect.
As values rise, the urgency for reform grows with them.
– Gotham Housing Alliance
