New York officials are trying to give shape to the pied-à-terre tax proposed by Governor Kathy Hochul, with significant questions about how the levy would work still unresolved amid broader Democratic discord over the state budget.
Last month, Hochul proposed a surcharge on second homes in New York City worth $5 million or more to help close the city's $5.4 billion budget deficit and find a compromise with Mayor Zohran Mamdani, who has pushed for higher taxes on the wealthy. The proposal has triggered anger and alarm among rich people who say they are being unfairly targeted.
This week, the governor unveiled a tentative deal on a $268 billion state budget that includes a tax on second homes that's projected to raise at least $500 million annually. But the framework provided no details on how the tax would be levied.
"To help out New York City, we're finalizing the details of a pied-à-terre tax to help close the city's budget gap without eroding its tax base or burdening hardworking New Yorkers," Hochul said at a news conference on Thursday. She estimated it would be at least four or five days before those details could be nailed down.
But so far the structure, tax rates and implementation of the plan haven't been settled, according to people familiar with the matter who weren't authorized to speak publicly about the closely held process.
The details of implementing the tax are far along, though none have yet been revealed, according to Department of Taxation and Finance Commissioner Amanda Hiller.
"There's lots of pieces of it that have been ironed out," Hiller said in an interview, adding, "one of the things that I've learned in my now very long career in government is that nothing's final until it's all final."
Several legal and logistical hurdles have slowed efforts to craft the tax legislation, including the number of agencies and offices involved, the technical aspects of the tax, and the opaque nature of state budget talks. A pied-à-terre tax proposed seven years ago failed because of similar issues.
Negotiations over the state's budget are always a sprint, with fewer than three months between the governor's initial proposal in January and a technical April 1 deadline for the state's fiscal year. State Senator Andrew Gounardes, a Democrat who chairs the committee on budget and revenue, said there had been no talks on details of the tax in budget conferences this week.
One factor that contributed to the delay is Hochul only informed Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie of the second-home tax proposal shortly before it was announced, the people familiar with the process said. The legislature's Democratic leaders also indicated that Hochul's announcement of a broader budget deal was premature.
"There's no budget deal," Heastie said. "The Speaker is correct," Senate Deputy Majority Leader Mike Gianaris said. A spokesperson for Stewart-Cousins didn't respond to a request for comment.
Political Tempest
Mamdani also wasn't told about Hochul's plans for the second-home tax until shortly before it was made public, according to the people familiar with the process. While the mayor had pushed several tax increases and other revenue-raising ideas, including an additional tax on residential properties worth more than $5 million, he hadn't specifically sought a new surcharge on pricey pieds-à-terre.
Still, Mamdani embraced the idea, touting it in a social media video shot in front of 220 Central Park South, a skyscraper where billionaire financier Ken Griffin bought a penthouse for a record $238 million in 2019. Many executives saw the post as threatening, with Griffin calling it "creepy and weird" while hinting he could curtail his company's presence in the city.
"While a lack of political courage has allowed proposals like this to wither on the vine, Mayor Mamdani and Governor Hochul are committed to getting this done," Mamdani's press secretary, Joe Calvello, said in a statement.
The political tempest has left Hochul in a difficult spot. After months of turning back Mamdani's calls for higher taxes, she had wanted to help the mayor fill his budget deficit and appeal to her party's left flank while keeping her promise not to raise income or corporate taxes on New Yorkers this year. A pied-à-terre tax would largely impact nonresidents.
The governor had rejected many of Mamdani's ideas on the grounds that they would alienate business and residents and drive economic activity out of the state. Yet Hochul didn't fully understand how difficult the pied-à-terre tax would be to implement, the people said.
In New York City, similar properties can have widely varying tax burdens due to quirks in how they are valued by revenue authorities. Single-family assessments are based on sale prices, while co-ops and condos are assessed by calculating the rental income they could theoretically generate.
The city has "a rather bizarre tax system" in which many properties are assessed at a much lower value than what they would fetch in a sale, Hochul said. "It's going to take some time to get to the right number."
"Properties that are worth $200 million for example, could be assessed at $7 million," Hochul said Thursday. Griffin's apartment has a current assessed value of $6.7 million, city tax records show.
"We're looking at the difference between what is currently assessed and the market value," she said.
Lingering Unknowns
Other unknowns remain, including how authorities will identify primary and secondary residences. A significant percentage of the city's most expensive properties are owned by limited liability companies whose true owners aren't public. It also isn't clear how homeowners would contest the tax.
Hiller said the state isn't considering structuring the levy as a transaction tax, similar to real estate transfer or mansion taxes. "The surcharge, the pied-à-terre tax, is not a sales tax," she said.
Also complicating efforts to flesh out the proposal is the fact the tax would be implemented by New York City officials who have no role in the budget negotiations, according to the people familiar with the talks.
The city's Department of Finance has offered multiple different framework proposals or models to the state tax department and has shared information about potential legal risks for each, according to the people.
Hochul said state officials were "having some really good conversations with the city." But city finance officials have limited visibility into what state lawmakers are actually negotiating in terms of structure or tax rates, the people said.
A spokesperson for the New York City Department of Finance declined to comment.
(Credit: Shutterstock)
Copyright 2026 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.