The high-stakes legislative drama in Albany has finally concluded. The New York State Legislature officially passed the state budget, bringing concrete answers to the real estate community after months of intense speculation.

For buyers, sellers, and professionals navigating the seven-figure housing markets across Queens, Nassau, and Suffolk Counties, the final budget package delivers a massive sigh of relief on one front, and a brand-new compliance hurdle on another.

If you were rushing to close a transaction to beat the highly publicized June deadlines for proposed real estate tax hikes, the landscape has completely shifted.

The Verdict: Did the Proposed Mansion Tax Hikes Pass?

No. The aggressive, sweeping Mansion Tax rate hikes that were originally pushed by the State Senate and Assembly in their One-House budget proposals were officially dropped from the final budget agreement.

The legislative proposals floated earlier this spring aimed to drastically increase the tiered progressive closing tax on all New York City residential purchases over $1 million, with a tentative implementation date of June 1. Had those hikes passed, a buyer closing on a $5 million home in Long Island City or Astoria would have seen their one-time closing tax skyrocket overnight.

Because the real estate lobby and moderate lawmakers successfully fought back against those hikes during final negotiations, the existing, baseline progressive Mansion Tax rates remain unchanged.

The Current Progressive Mansion Tax Scale
Because the proposed changes failed to become law, the baseline progressive scale remains exactly as it has been. The tax is paid entirely by the buyer at closing and applies to the entire purchase price (it is NOT graduated) if the property sits within the five boroughs:

$1,000,000 to $1,999,999: 1.00%

$2,000,000 to $2,999,999: 1.25%

$3,000,000 to $4,999,999: 1.50%

$5,000,000 to $9,999,999: 2.25%

$10,000,000 to $14,999,999: 3.25%

$15,000,000 to $19,999,999: 3.50%

$20,000,000 to $24,999,999: 3.75%

$25,000,000 and above: 3.90%

Outside of the NYC line—meaning all residential property transactions throughout Nassau and Suffolk Counties—the tax remains a flat 1% on any purchase of $1 million or more, regardless of how high the final sale price goes.

The Big Shift: The Pied-à-Terre Surcharge Has Passed
While the one-time Mansion Tax increase was defeated, Albany balanced the scales by passing the highly controversial Pied-à-Terre Tax Surcharge. This measure has been officially signed into law and is slated to take effect on July 1, 2026.

Unlike the Mansion Tax, which is a one-time fee paid at the closing table, the Pied-à-Terre tax is a recurring annual property tax surcharge. It is designed specifically to target non-resident buyers who utilize New York City real estate as seasonal or secondary housing.

The mechanism of this new law relies on three strict criteria:
Geographic Boundaries: The surcharge applies strictly to properties located within the five boroughs of New York City (including high-end condos and multi-family homes in Queens). It does not apply to properties in Nassau or Suffolk Counties.

The Price Point: The annual surcharge triggers on residential properties (one- to three-family homes, condominiums, and co-operatives) that carry an assessed market value or sale price equivalent of $5 million or more.

The Primary Residence Test: If the owner’s primary, legal residence is outside of the five boroughs, the tax applies. If the property is the owner's primary home, or if it is rented out to a full-time tenant for at least one year, it is exempt from the surcharge.

The Border Effect: Queens vs. Long Island
The passage of the state budget creates a stark divergence at the municipal border. A luxury buyer seeking a high-value property faces an entirely different financial trajectory depending on which side of the county line they choose.

A non-resident buyer purchasing a $5.5 million luxury condo in Long Island City, Queens, will pay a one-time 2.25% Mansion Tax at closing, followed by a brand-new, recurring annual Pied-à-Terre tax bill every single year they own it.

Conversely, if that same buyer shifts their search eastward into Nassau or Suffolk Counties—exploring the Gold Coast of the North Shore or the premier estates of the Hamptons—they bypass the progressive tiers entirely. They will pay a flat 1% state Mansion Tax at closing, and they will face an absolute zero-dollar annual Pied-à-Terre surcharge, regardless of whether the home serves as a secondary property or a seasonal retreat.

Navigating the shifting terrain of tax codes, geographic exemptions, and contract structures requires sophisticated local guidance. Ensuring your next transaction is timed and structured correctly can mean the difference of thousands of dollars in long-term carrying costs.

By:
Christopher Robson
Licensed Real Estate Broker
Molloy University Real Estate Faculty
(516) 459-9564
chris@educatorsrealty.com