New York City’s proposal to raise property taxes by roughly 10 per cent has reignited a national debate over real estate taxation, fiscal stability and household affordability.
Mayor Zohran Mamdani has framed the measure as a potential last resort in the city’s budget process, arguing that if state lawmakers decline to increase taxes on millionaires, the burden may shift to property owners. The proposal comes amid a period of sustained home price growth, with US house prices rising approximately 55 per cent nationwide between 2020 and 2025, driving higher assessed values and, in many jurisdictions, larger tax bills.
Property taxes, levied on real estate based on assessed value, represent the largest single source of state and local tax revenue. In fiscal year 2022, they accounted for 27.4 per cent of total state and local collections and 70.2 per cent of local tax collections, according to the Tax Foundation. Their relative stability makes them attractive to governments, as property is immovable and values tend to increase over time. Variations in tax burdens across jurisdictions reflect differences in assessed values and tax rates, which may be expressed in percentage terms or in mills per $1,000 of value.
Reassessment cycles play a critical role in determining liability. Some states conduct annual reassessments, while others operate on multi-year schedules or reassess primarily at the point of sale. In rising markets, timing can significantly affect tax exposure. Several states cap annual increases in assessed value to moderate volatility, while appeals processes allow owners to challenge valuations through administrative review or court proceedings, often within strict filing deadlines.
The federal dimension further complicates the issue. The state and local tax deduction, capped at $10,000 since 2017, was temporarily increased to $40,000 for most filers in 2025, with a scheduled reversion in 2030 absent congressional action. Once the cap is reached, additional property taxes are not deductible, intensifying the impact of local rate increases in high-tax jurisdictions.
As revenue growth slows in some states, policymakers face competing pressures between relief and fiscal balance. The New York proposal underscores the broader tension between maintaining essential services and managing the political and economic sensitivities surrounding real estate taxation.
