O’Connor discusses how the new possible New York City property tax hike of 10% demonstrates why businesses should explore tax reduction.
NEW YORK, NY, UNITED STATES, February 25, 2026 /EINPresswire.com/ —
The state of New York is in the top 10 when it comes to property tax costs, with property taxes in New York City being even higher. Thanks to limited space, especially in premium locations, the value of property continues to go up within NYC’s borders, while suburban counties like Westchester and Nassau have taxes even higher than those in the city. Taxes have been especially arduous for commercial real estate and business owners, as these are not as sheltered by New York’s hundreds of exemptions, unlike homes. Businesses have increasingly borne the burden in recent decades, with more increases likely to come.
The newest threat on the horizon is a possible giant tax spike that will hit both homeowners and businesses. In an effort to solve a worsening budget crisis, the new mayor of New York City, Zohran Mamdani has stated that property taxes must be raised by almost 10% to cover a budgetary shortfall, and has said he will pull the trigger on this apocalyptic scenario if the governor of the state does not allow a new tax on the wealthy. With over 100,000 businesses in the crosshairs, this demonstrates why commercial real estate owners need to look into taking care of their own taxes in the face of possible government actions.
The Proposed Tax Raise
With a deficit of over $5 billion to make up for, the new mayor has been looking for ways to fill the gap. Fixing the previous administration’s mess has been a tradition for countless new mayors over the decades, with some seeing even larger gaps. The mayor wants to raise income taxes on millionaires and major corporations to make up the difference, but this needs to be approved by the governor, who is currently opposed to the idea. A property tax increase of 9.5% has been proposed as a measure of last resort. This would raise taxes on all people and businesses, affecting 3 million homeowners and around 100,000 businesses. This would cost homeowners around $700 a year, while businesses could lose millions, depending on their size.
Commercial Real Estate Acts as NYC’s Piggy Bank
Those who own a business or operate commercial properties in New York City know how high taxes can be on buildings and land. Thanks to the small amount of room available inside the five boroughs, real estate is at a premium, with commercial properties even more so. Due to things like zoning laws and the unique construction that many businesses need, new construction is often difficult or impossible, not to mention the astronomical cost. This makes competition for existing properties fierce, which then substantially drives up the market value. The city then assesses this hot property market, often several years out of date. This forms the basis for the rising tax bills seen in New York City.
In order to protect homeowners, it is commercial properties that bear the brunt of taxes. Nearly 80% of all tax revenue in the city comes from Class 2 and 4 properties, which represent a massive burden. This has made businesses the favorite target of new taxes, as it is easy to generate a great amount of revenue from relatively few entities. In theory, this protects homeowners, but in reality, this mostly raises prices on renters, as Class 2 properties are mostly apartment buildings. These taxes usually translate into larger rents, passing the buck on to the average New Yorker. A proposed property tax increase would raise costs for both owners and renters.
The Taxable Value of Businesses is Already Climbing
Due to standard economic factors, the value of business real estate across New York City has already seen strong gains on the tentative tax roll, which forecasts massive gains for both apartments and standard commercial properties. Thanks to businesses returning to offices after the pandemic, the demand for office space is driving a new boom in that sector, which has brought the total value of commercial real estate in the city to around $135 billion. Retail spaces are likewise seeing a huge bounce back, fueled by more people working in the city. Class 2 properties added 6.7% to their value in one year alone, signaling higher rents and taxes for tenants and apartment owners respectively.
Commercial Property Owners can Lower Their Taxes and Values with Appeals
This latest crisis, along with the underlying budget issues, demonstrates why business owners of all sizes should always stay on top of their assessments and taxes. While property owners cannot control the market or the government, they can do their part to protect their business from outside forces. This starts with property tax appeals. Called grievances in the rest of the state, New York City commercial appeals are the best way to lower the property tax burden. The protests allow owners to challenge their assessed value, updating it to today’s market conditions rather than being stuck in a past boom period. While New York City values are going up, it is best to ensure that owners are only paying what they owe. With tax rates up in the air, lowering the value could save owners millions.
New York City is notorious for arcane tax laws and an outdated assessment system, so using an appeal can fix some blatant errors. With the tentative assessment roll available, owners can preview any basic issues that the assessment might have. The biggest one is to ensure that the property is properly classified. The next step is to ensure that the property size is correct. If that basic information is accurate, then look at the market and assessed values. If they seem high, then an appeal is probably necessary. Gather photographs of the property and its condition, gather financial documents and ensure their accuracy. The Real Property and Income Expense Statement (RPIE) is a good start, but owners need to demonstrate their business’ income and expenses accurately. This means removing things from the equation that are not taxed, including intangible assets like software, contracts, and warranties. Once the evidence is collected, owners can file an appeal with the New York City Tax Commission.
Cost Segregation Handles Other Tax Issues for Businesses
Property taxes can be unpredictable and a huge expense, but federal income taxes can be just as mercurial and costly. However, owners can use their real tangible property to offset or even eliminate federal taxes. Using accelerated depreciation on qualifying components of tangible assets like fixtures, furniture, machinery, fencing, and buildings, can shield owners from taxes. Thanks to new legislation, bonus depreciation is once again at 100%, returning from a long stint of sunsetting. This means owners could eliminate federal taxes entirely in the first year through bonus depreciation. Cost segregation studies do take a strong investment, but they can easily pay for themselves. With bonus depreciation added in, they often pay for themselves several times over.
New York City Appeal Deadline is March 1, 2026
While appeals can take months in the system to bring results, owners must file by a set time. Many counties offer extensions, but NYC always sticks to its deadline. In 2026, this is March 1. That means owners are pressed for time. Getting the appeal done is fantastic for a business, not only now, but for years to come. Appeals help set a baseline for the property’s value, which makes later appeals easier to prove. With uncertainty and unreliability in tax rates or rent freezes in the near future, getting a true value established should be a top priority when it comes to handling finances. With time being so short, owners might want to use professionals to make their appeal go smoothly.
About O’Connor:
O’Connor is one of the largest property tax consulting firms, representing 185,000 clients in 49 states and Canada, handling about 295,000 protests in 2024, with residential property tax reduction services in Texas, Illinois, Georgia, and New York. O’Connor’s possesses the resources and market expertise in the areas of property tax, cost segregation, commercial and residential real estate appraisals. The firm was founded in 1974 and employs a team of 1,000 worldwide. O’Connor’s core focus is enriching the lives of property owners through cost effective tax reduction.
Property owners interested in assistance appealing their assessment can enroll in O’Connor’s Property Tax Protection Program ™. There is no upfront fee, or any fee unless we reduce your property taxes, and easy online enrollment only takes 2 to 3 minutes.
Patrick O’Connor, President
O’Connor
+1 713-375-4128
email us here
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