What it is in one paragraph
The mansion tax was created by New York in 1989 as a flat 1% on residential sales of $1 million or more. In 2019 the legislature added seven additional tiers above $2 million, climbing to 3.9% on sales of $25 million and up. It applies to NYC and to other parts of New York State. It is a state tax, separate from the NYC and NYS transfer taxes the seller pays. The buyer writes the check at closing.
The 2026 rate schedule
| Sale price | Mansion tax rate | Tax owed at the bottom of the tier |
|---|---|---|
| Under $1,000,000 | 0% | $0 |
| $1,000,000 – $1,999,999 | 1.00% | $10,000 |
| $2,000,000 – $2,999,999 | 1.25% | $25,000 |
| $3,000,000 – $4,999,999 | 1.50% | $45,000 |
| $5,000,000 – $9,999,999 | 2.25% | $112,500 |
| $10,000,000 – $14,999,999 | 3.25% | $325,000 |
| $15,000,000 – $19,999,999 | 3.50% | $525,000 |
| $20,000,000 – $24,999,999 | 3.75% | $750,000 |
| $25,000,000+ | 3.90% | $975,000+ |
The cliff effect — and why it matters
The mansion tax is not marginal. Whatever rate applies to your tier is the rate on the entire purchase price, not just the amount above the tier threshold. That creates an instant jump every time a deal crosses a line:
- $999,999 → $1,000,000: mansion tax goes from $0 to $10,000. A $1 difference creates a $10,000 tax.
- $1,999,999 → $2,000,000: tax goes from $19,999.99 to $25,000. The next dollar costs $5,000.
- $2,999,999 → $3,000,000: tax jumps from $37,499.99 to $45,000. That extra dollar costs $7,500.
- $4,999,999 → $5,000,000: jumps from $74,999.99 to $112,500. The next dollar costs $37,500.
- $9,999,999 → $10,000,000: jumps from $224,999.98 to $325,000 — the next dollar costs $100,000.
This is why high-end deals are routinely negotiated to land at $999,999, $1,999,999, or $4,999,999. The seller usually agrees because, for them, the difference is small; for the buyer, it can be tens of thousands. Real estate attorneys earn their fees here.
Who pays — and how it shows up at closing
The buyer pays. The amount is collected by the title company and remitted to NY State on Form TP-584 at recording. Funds are typically wired with the buyer's other closing funds.
Mansion tax is a different tax from the New York State and NYC transfer taxes paid by the seller. Don't double-count when modeling closing costs:
- Buyer: mansion tax (1.0–3.9% if $1M+).
- Seller: NYS RETT (0.4%) + NYC RPTT (1.0% under $500K, 1.425% at or above) + 0.25% NYS supplemental (residential $3M+).
Examples by deal size
$1.4M Brooklyn condo
Mansion tax: 1.00% × $1,400,000 = $14,000. Seller-side transfer tax: $25,550 (1.825% on $1.4M). Combined closing-day tax burden: $39,550.
$2.5M Manhattan condo
Mansion tax: 1.25% × $2,500,000 = $31,250. Seller-side: $45,625. Combined: $76,875.
$5.5M Tribeca penthouse
Mansion tax: 2.25% × $5,500,000 = $123,750. Seller-side: $114,125 (includes the 0.25% NYS supplemental). Combined: $237,875.
$12M Central Park-facing condo
Mansion tax: 3.25% × $12,000,000 = $390,000. Seller-side: $249,000. Combined: $639,000.
Run your own numbers: the NYC Transfer & Mansion Tax Calculator shows the buyer/seller/combined breakdown for any sale price.
What the mansion tax is NOT
- Not a recurring tax. Mansion tax is paid once, at closing. It does not appear on annual property tax bills.
- Not the pied-à-terre tax. Hochul's May 2026 budget framework included a separate proposed pied-à-terre tax — a recurring tax on second homes worth $5M+. That's a different concept and has not been enacted. Read the news coverage.
- Not deductible against federal income tax in most cases. Mansion tax is generally added to the buyer's cost basis (reducing capital gain at future sale) rather than deductible in the year paid.
- Not on commercial property. Commercial sales pay different transfer taxes; mansion tax is residential-only.
FAQ
What is the NYC mansion tax?
A one-time NY State tax on residential property sales in New York City of $1 million or more, paid by the buyer at closing. Rates 1.0%–3.9% across 8 tiers; applies to the entire purchase price.
How much is the mansion tax for 2026?
1.0% on $1M–$2M; 1.25% on $2M–$3M; 1.5% on $3M–$5M; 2.25% on $5M–$10M; 3.25% on $10M–$15M; 3.5% on $15M–$20M; 3.75% on $20M–$25M; 3.9% on $25M+.
Does the buyer or the seller pay?
The buyer.
Does it apply to the whole price, or only the amount above $1M?
The whole price. Cliff structure — a $1M deal triggers $10,000 in tax; a $999,999 deal triggers $0.
Is the mansion tax changing in 2026?
Not as of May 2026. Bills proposing higher rates have been introduced; the May 7, 2026 Hochul budget framework included a separate pied-à-terre tax proposal. No enacted changes yet.