New York State Budget New York City

State Legislature Backs Tax Hikes on Wealthy, Adding Fuel to Mamdani’s Push

The Senate and Assembly’s budget proposals include many of the mayor’s desired revenue-raisers and give the city a larger cut of state funds.

Nick Garber · March 10, 2026

| Photos: NYS Senate Media Services; NYC Mayor's Office | Illustration: Leor Stylar

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State lawmakers gave their stamp of approval to many of the tax increases pushed by New York City Mayor Zohran Mamdani, adding fuel to his campaign to pressure Governor Kathy Hochul into approving the revenue-raisers.

In their budget proposals released Monday night, the state Senate and Assembly both included tax increases for high earners and corporations. The income tax hikes are smaller than what Mamdani is seeking, while the business tax increases match the mayor’s recent scaled-down demands. They’re both similar in scope to the legislature’s proposals last year.

Both houses also voiced support for pilot programs to make some buses fare-free, although they stopped short of meeting Mamdani’s goal of ending fares entirely.

Assembly and Senate leaders appear to have heeded Mamdani’s call to help the city deal with a $5.5 billion budget shortfall over the next two years. Both houses proposed a range of smaller tax hikes and funding shifts that would benefit the city, including shrinking a tax credit used by some well-paid executives, expanding a “mansion tax” on homes sold for more than $5 million, and sending the city hundreds of millions of dollars in aid.

Exactly how much revenue those policies would bring the city was not immediately clear, although the business taxes alone would provide about $1.75 billion, according to estimates from the mayor’s office first reported by New York Focus.

Mamdani’s New Albany Asks: Smaller Corporate Tax Hike, Fees on Pricey Home Sales

Nick Garber

“I’m grateful that the Assembly and Senate One-House Budgets recognize the scale of the fiscal crisis facing New York City,” Mamdani said in a statement, thanking Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart-Cousins for taking “meaningful steps toward closing the deficit we inherited.”

It’s no shock that lawmakers are supporting tax increases, which the Senate and Assembly supported long before Mamdani’s election. The Assembly proposed raising personal income taxes statewide by 0.2 percentage points for people earning between $5 million and $10 million and adding new brackets for the highest earners, while also cutting taxes for filers earning below $323,200. The Senate is supporting a bigger increase of 0.5 points for filers earning above $5 million, and did not call for any tax cuts.

Mamdani, for his part, is pushing a bigger 2-point increase for filers earning above $1 million, which would have brought in $3 billion in revenue. Neither house signed onto Mamdani’s proposal for a new 1-percent property-tax surcharge on homes valued over $5 million.

On statewide corporate taxes, the Assembly backed a 2-point increase for businesses with at least $10 million in revenue, while the Senate would raise taxes by 1.75 points on firms earning over $5 million. And both houses signed onto Mamdani’s request to raise New York City’s own corporate tax rates. All of those increases would take effect this year.

Hochul, by contrast, has ruled out raising income taxes and omitted any increases in her January executive budget. She did propose maintaining current corporate tax rates by extending a pandemic-era surcharge through 2029, but did not support increasing business taxes.

The mansion tax backed by both houses would raise current tax rates by about 1.4 points on expensive home sales. A cut to the city’s Pass-Through Entity Tax, which currently lets some executives use their business tax payments to fully cancel out what they owe in personal income taxes, would shrink that benefit from 100 percent to 75 percent — matching what Mamdani wanted. (The Senate also called for shrinking a similar state-level benefit to 90 percent).

The Senate, meanwhile, included Mamdani’s proposal to scrap a sales-tax exemption on gold bars and other precious metals, which would produce about $300 million in revenue for the city and $601 million for the state, according to the mayor’s office.

And both houses signaled support for Mamdani’s quest to give the city a larger cut of state aid. The Assembly would give the city $1 billion, divided evenly over three years, by welcoming the city back into the Aid and Incentives to Municipalities program that it was kicked out of in 2011. The Senate would give the city $604 million over two years from the same program.

The Senate wants to offer the city $500 million to cover homeless shelter costs, while the Assembly would dole out $600 million to help the city comply with the costly school class-size mandate. And both houses would give the city upwards of $150 million to undo a previous cut in state assistance for low-income families.

On buses, the Assembly proposed $15 million to cover at least one fare-free line in each of the five boroughs. The Senate’s budget resolution offered fewer specifics, saying only that it “continues to support a revival” of the short-lived free-bus pilot that began in 2023.

The progressive Fiscal Policy Institute praised the proposed tax hikes for their potential to expand state services, while criticizing the Assembly’s proposal to cut taxes for upper middle-class earners. Emily Eisner, FPI’s acting director and chief economist, said the new revenue would go only so far for New York City.

“Both one-house proposals give New York City authority to increase its tax revenue and reverse recent cost-shifting,” Eisner said, “enough to close the current gaps and prevent cuts to vital services, but not enough to fully achieve the new mayor’s affordability mandate.”