NYC Property Tax Trends 2026

NYC property tax is calculated separately for each of four tax classes:

• Class 1 — 1–3 family homes. 6% assessment ratio. Capped 6%/year, 20%/5 years.
• Class 2 — Co-ops, condos, and rentals 4+ units. 45% assessment ratio. Capped 8%/year, 30%/5 years.
• Class 3 — Utility property. Set by the state.
• Class 4 — Commercial & industrial. 45% assessment ratio. No cap — full market.

Effective tax rate (ETR = total tax / market value) reveals how much each class actually pays once the formula compresses through assessment ratios and caps. Class 1 has the lowest ETR (often under 1%) because the 6% assessment ratio combined with the cap suppresses assessed value relative to market. Class 4 (commercial) has the highest ETR — closer to 4.5% — because there is no cap and the full 45% ratio applies.

The 421-a program (now lapsed under that name and replaced by 485-x) provided 10–35 year tax exemptions for new residential construction. Tens of thousands of units begin transitioning from full exemption into the post-benefit phase between 2026 and 2030. Owners holding 421-a properties through expiration face stepped tax increases — building underwriting from acquisitions made in the last decade should re-test against post-benefit tax burden.

The largest exemptions and abatements by participation count are STAR/Enhanced STAR (basic owner-occupied), SCHE (senior), DHE (disabled), and legacy J-51 (residential renovations — the original program lapsed and was revamped in 2024 as the Affordable Housing Rehabilitation Program, informally "J-51 R"). 421-a/485-x and ICAP (commercial) are the largest by total dollar value.

The Tax Commission filing window for assessment challenges closes March 15 for Class 1 and March 1 for Classes 2, 3, and 4. With market values flat or down in some segments while assessed values continue catching up under the cap formula, 2026 is a high-leverage year for filing protests.