Hochul backs luxury pied-à-terre tax to raise millions for New York budget

Gov. Kathy Hochul moved to tax New York City’s most expensive second homes, backing a pied-à-terre levy aimed at properties worth $5 million or more as Albany tries to close a major fiscal gap. Her budget team estimates the surcharge could bring in at least $500 million in recurring annual revenue, though the rate has not been set and would still need approval from state lawmakers and city officials.

The proposal would fall on owners of ultra-high-end homes that are not used as primary residences, concentrating the tax on wealthy people who spend only part of the year in New York City. Reporting indicates the plan would likely use multiple brackets with different rates. Zohran Mamdani supported the idea publicly and called it a step toward balancing the budget by taxing the ultra-wealthy, while also describing it as the first tax of its kind in New York state.

Hochul’s backing marks a notable shift for a governor who has previously resisted raising taxes on the rich and on corporations, warning that heavier levies could push wealthy residents out of New York. The timing also matters: state budget negotiations are already weeks late, and officials are still searching for ways to fill a significant hole in the finances.

The idea has deep roots in state politics. New York lawmakers have debated a pied-à-terre tax for years, including a 2019 Senate bill that would have authorized New York City to impose an additional tax on non-primary residences valued at $5 million or more. At the time, advocates said the measure could raise roughly $490 million to $650 million a year, while opponents argued it could damage the luxury real-estate market and should not stand in for broader property-tax reform.

Those arguments are resurfacing now. Supporters frame the levy as a fairness measure, one that asks owners of high-end homes that often sit empty to contribute more to the city that houses them. Critics counter that even a tax on the richest second-home owners would not come close to closing New York City’s much larger budget hole. The Citizens Budget Commission has estimated a graduated version of the tax, starting at 0.5 percent of the value above $5 million and rising to 4.0 percent above $25 million, could yield about $650 million a year. The Fiscal Policy Institute has put the range at $490 million to $650 million.

For Hochul, the proposal tests whether taxing idle luxury wealth can do more than signal political priorities. If lawmakers and city officials approve it, the levy would reach a narrow slice of the housing market, but its value as a budget fix would still depend on whether the state is looking for revenue, symbolism, or both.