The one-paragraph summary
NYC sorts every property into one of four classes. Each class has an assessment ratio (what fraction of market value becomes the taxable assessed value) and a tax rate (what percent of assessed value you owe). Class 1 (1–3 family homes) has a 6% assessment ratio and roughly a 20% rate. Class 2 (condos, co-ops, 4+ unit residential) has a 45% ratio and roughly a 12% rate. The math feels strange because the rate is applied to the assessed value, not the market value — and for condos and co-ops, the assessed value is set using the income approach rather than sale comps, which systematically understates high-end condo values.
The four classes (and what's in each)
| Class | What's in it | FY 2026 interim rate | Assessment ratio |
|---|---|---|---|
| Class 1 | 1, 2, and 3-family homes; small mixed-use | 20.630% | 6% of market value (with caps) |
| Class 2 | Condos, co-ops, 4+ unit residential rentals | 12.340% | 45% (large bldgs); 6% with caps for ≤10 units |
| Class 3 | Utility property (gas/electric/telecom) | 11.114% | Set by state utility tables |
| Class 4 | Commercial & industrial (offices, retail, hotels, factories) | 10.774% | 45% of market value |
City Council revised these rates on October 29, 2025 under Chapter 487 of 2025, using a 1% Class Shares Cap. The revisions slightly lowered Class 1 and Class 3, and slightly raised Class 2 and Class 4. Always confirm against your most recent DOF bill.
How the math actually works (Class 1 example)
Take a 1-family home in Astoria with a $1.2 million market value:
- Step 1: Assessed value = $1,200,000 × 6% = $72,000.
- Step 2: Annual tax = $72,000 × 20.630% = $14,854.
- Effective rate: $14,854 / $1,200,000 = 1.24% of market value.
The headline 20% rate makes property tax sound brutal. The 6% assessment ratio brings it back to a normal range. Then the assessment caps — 6% per year, 20% over five years — slow the growth even further. A house that's been owned for 20 years often has an assessed value far below what the 6% calculation would produce on a fresh purchase, because the caps held growth back during years of fast appreciation.
How the math works (Class 2 condo example)
A $3 million Manhattan condo in a 50-unit building, on paper:
- Step 1: Assessed value = $3,000,000 × 45% = $1,350,000.
- Step 2: Annual tax = $1,350,000 × 12.340% = $166,590.
- Effective rate: 5.55% of market.
5.55% of market value would be the highest residential property tax in the country. Almost no Manhattan condo actually pays that. The reason: the city does not use the unit's market value (the price you'd pay for it). It uses an income-based assessed value — what the city estimates the unit would generate as a rental, after expenses, capitalized at a published cap rate. For a luxury Manhattan condo where comparable rentals are scarce or non-existent, the income-based estimate runs far below the sale price.
So in practice, that same $3M condo might have an assessed value of $200,000–$400,000 (not $1,350,000), producing a tax bill in the $25,000–$50,000 range — roughly 1% of market value, comparable to the Class 1 effective rate. The mechanics are technically legal and unchanged for years; they're also why Albany has periodically explored a pied-à-terre tax as a workaround for the high end of the condo market. (See our May 2026 news coverage on the latest version of that proposal.)
Abatements and exemptions: where bills actually fall
The numbers above are unabated. Most owner-occupants qualify for at least one of the following:
- STAR (Basic): Available to owner-occupants with household income under $500,000. Saves about $300–$1,500/year depending on assessed value and school district.
- Enhanced STAR: Larger savings for senior owner-occupants (age 65+) with income under the annual cap (~$98,700 for 2025 income year).
- SCHE — Senior Citizen Homeowners' Exemption: up to 50% reduction in assessed value for low-income owners 65+. Income limit $58,399 for the maximum exemption.
- DHE — Disabled Homeowners' Exemption: parallel to SCHE for owners with documented disabilities.
- Veterans' exemption: partial assessment reduction, larger for combat-zone vets.
- Co-op / Condo Abatement: for owner-occupied units in 4+ unit buildings — 17.5%–28.1% reduction in tax owed, sliding scale based on average assessed value per unit.
- 421-a, 421-g, J-51: tax abatements common on newer Manhattan and Brooklyn condos. Often reduce taxes by 50%+ during the abatement period (10–25 years), then phase out.
If you're shopping for a condo, the listing should disclose any active abatement and its expiration date. A unit currently paying $4,000/year in tax under a 421-a that expires in three years will be paying $20,000+ once the abatement runs off. Buyers routinely miss this in offer modeling.
When property taxes are due (and what your bill actually says)
Most NYC properties are billed quarterly: July 1, October 1, January 1, April 1. Properties with assessed value above $250,000 are billed semi-annually (July 1 and January 1). DOF offers a small discount (about 0.5%) for paying the full year up front in July.
The bill itself shows: market value, assessed value, exemption amounts, taxable value, the tax rate, gross tax, abatement credits, net tax. The most important number to verify each year is the market value on line 1 — DOF estimates can drift, and grieving an over-stated market value through the Tax Commission is a routine procedure (deadline March 1 each year for Class 1 and 2; March 15 elsewhere) that typically pays off if your market value is more than 5% over actual.
Try the math on your home: use the NYC Property Tax Calculator to plug in your market value and class. The result is the unabated baseline — most owners pay less, depending on which abatements they qualify for.
FAQ
What are the four NYC property tax classes?
Class 1: 1-, 2-, and 3-family homes plus small mixed-use. Class 2: condos, co-ops, and 4+ unit residential. Class 3: utility properties. Class 4: all commercial and industrial. Each class has its own assessment ratio and tax rate.
What is the NYC property tax rate for 2026?
Interim FY 2026 rates: Class 1 = 20.630%, Class 2 = 12.340%, Class 3 = 11.114%, Class 4 = 10.774%. The City Council revised these on October 29, 2025; final rates are slightly different. Confirm against your DOF bill.
Why is my Manhattan condo's property tax bill so much lower than my friend's house in Queens?
Because NYC values condos and co-ops using the income approach (as if they were rentals) rather than using sale comps. For luxury condos with no comparable rentals, this systematically understates assessed value, making the effective tax rate often closer to 1% of market than the headline 12% suggests.
What abatements lower my NYC property tax?
STAR / Enhanced STAR for owner-occupants; SCHE / DHE / Veterans' exemption for qualifying owners; Co-op / Condo Abatement for owner-occupied units in 4+ unit buildings; 421-a / 421-g / J-51 for newer construction. Most owner-occupants get at least one of these.
How is NYC property tax different from NYC income tax?
Property tax is on real-estate ownership, billed quarterly by the city. Income tax is on wages, withheld from paychecks. Read our property-vs-income comparison for what each costs at typical levels.