NYC Mansion Tax 2026: Rates, Brackets, and Who Pays

Every buyer considering a purchase in NYC must weigh the city's infamous mansion tax. It ranges from 1% of the purchase price on a $1 million condo to 3.9% on a $25 million-plus townhouse. The buyer pays it. It is a one-time tax due at closing, and crucially, it applies as a cliff: the rate for your bracket lands on the entire purchase price, not just the slice above the threshold. One extra dollar at a bracket edge can cost tens of thousands.

This guide covers what the tax is, the full rate schedule as of May 2026, why the cliff structure matters more than the rates themselves, who pays, and how serious buyers negotiate around the bracket edges. For an estimate against a specific price, see our NYC buyer closing cost calculator.

This article is general information, not tax or legal advice. Rates and rules are current as of May 2026; confirm with your attorney for any specific transaction.

What the NYC mansion tax is

The mansion tax is a real estate transfer tax under New York State Tax Law (Article 31) on residential property sales of $1 million or more. It has two layers:

• A base 1% state mansion tax that applies to qualifying residential sales anywhere in New York State.
• A progressive NYC additional tax that stacks on top, kicking in at $2 million and escalating in seven steps up to a combined 3.9% at $25 million-plus.

For NYC buyers, the practical number is the combined rate, which is what every closing statement and calculator shows. The two-layer history matters mainly because non-NYC buyers in New York State pay only the 1% layer.

The current progressive structure dates to the 2019 New York State budget, which replaced the old flat 1% (which applied uniformly to anything $1 million or more) with the eight-tier schedule below. The rates have not been changed in subsequent budgets, including the 2026-27 budget passed in May 2026.

The full mansion tax rate schedule

For a Manhattan or NYC residential purchase, the combined rate is:

Purchase price	Combined rate
Under $1,000,000	0% (no mansion tax)
$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%

A few practical notes on the table:

• The rate applies to the full purchase price, not the amount above a threshold. A $5 million purchase pays 2.25% on $5 million, which is $112,500, not 2.25% on the slice above $5 million.
• The brackets are closed at the top and open at the bottom. A purchase of exactly $2,000,000 falls in the 1.25% bracket, not the 1.00% bracket. A purchase of $1,999,999 falls in the 1.00% bracket.
• The tax is due at closing and is the buyer's obligation.

The cliff effect, and why it matters more than the rates

The cliff structure is what gives the mansion tax its negotiating gravity. Because each bracket's rate applies to the entire price, the marginal cost of crossing a threshold is much larger than the rate increase suggests.

At the $2 million edge:

• A $1,999,999 purchase pays 1.00% × $1,999,999 = $19,999.99.
• A $2,000,000 purchase pays 1.25% × $2,000,000 = $25,000.00.
• One extra dollar of price costs the buyer an additional $5,000.01 in mansion tax.

At the $5 million edge, the cliff is larger:

• A $4,999,999 purchase pays 1.50% × $4,999,999 = $74,999.99.
• A $5,000,000 purchase pays 2.25% × $5,000,000 = $112,500.00.
• One extra dollar costs $37,500.01.

At the $10 million edge, larger still:

• A $9,999,999 purchase pays 2.25% × $9,999,999 = $224,999.98.
• A $10,000,000 purchase pays 3.25% × $10,000,000 = $325,000.00.
• One extra dollar costs $100,000.02.

This is why prices in the Manhattan luxury market cluster just below each bracket edge. A unit listed at $5,100,000 will often trade at $4,995,000, because the seller can capture more by leaving room under the cliff than by holding firm above it.

Who pays the mansion tax

The buyer. Always the buyer.

That sounds like a small point, but it matters for two reasons. First, the buyer needs to budget for it as a closing cost, separate from the down payment. Second, because the buyer pays it, the cliff effect translates directly into the buyer's negotiating leverage. A seller who insists on $5,000,000 instead of $4,995,000 is asking the buyer to take a $37,500 tax hit for $5,000 of price. Sophisticated buyers price that into the offer, and sophisticated sellers know the cliff before listing.

What properties trigger the mansion tax

The tax applies to residential real property sold for $1 million or more. In NYC that includes:

• Condominium units
• Co-op apartments (the mansion tax applies even though a co-op transfer is technically the sale of shares, not real property)
• One-to-three-family houses
• Townhouses

It does not apply to commercial property, vacant land, or residential sales under $1 million.

For a co-op, the price the tax applies to is the share-purchase consideration: in practice, the contract price.

How buyers plan around the brackets

There are three patterns experienced buyers use, in roughly increasing order of leverage.

1. Negotiate to the bracket edge. The simplest move. If a unit is listed at $2,050,000, an offer of $1,999,000 puts the buyer in the 1.00% bracket instead of 1.25%, saving roughly $5,500 of mansion tax. Sellers near a bracket edge often accept this because the headline price is close enough to their target, and they understand the buyer's math.

2. Separate the apartment from the inclusions. If a seller is including furniture, art, parking, or storage at a price that pushes the total over a bracket, those items can sometimes be valued separately in a personal-property bill of sale, leaving the real estate consideration below the bracket. This must be done at fair market value with the attorneys' involvement, and the line between legitimate allocation and aggressive structuring is one your attorney must police.

3. Walk away. At the highest brackets, the cliff cost is so large that some buyers refuse to cross. The Manhattan market visibly thins between, for example, $4.9 million and $5.1 million for exactly this reason.

For a head-to-head estimate of what a price change does to your closing costs, run the numbers in our NYC buyer closing cost calculator.

What the mansion tax is NOT

Two clarifications worth making, because they are the questions buyers most often arrive with:

It is not the pied-à-terre tax. The mansion tax is a one-time transfer tax due at closing, paid by the buyer, based on the purchase price. New York's pied-à-terre tax (passed May 27, 2026 and effective July 1, 2026) is an annual surcharge on non-primary-residence homes, paid by the owner each year, based on the NYC Department of Finance valuation. The two taxes can apply to the same property and do not offset each other.

It is not the mortgage recording tax. The Mortgage Recording Tax is a separate transfer-side tax of roughly 1.8% to 1.925% on the mortgage amount (not the purchase price), and it does not apply to co-ops. The mansion tax applies to all qualifying residential types and is based on price.

A worked example

A buyer is negotiating a Manhattan condo listed at $3,100,000.

• At the asking price: 1.50% × $3,100,000 = $46,500 mansion tax.
• At a negotiated price of $2,950,000 (just under the $3M bracket edge): 1.25% × $2,950,000 = $36,875 mansion tax.

The price comes down by $150,000, and the mansion tax comes down by $9,625. The buyer's total saving versus paying $3.1 million is $159,625. For a seller, the calculus is the mirror image: agreeing to $2,950,000 instead of $3,100,000 surrenders $150,000 of price but unlocks an additional $9,625 of after-tax buying power for the buyer, which often closes the gap on smaller objections.

Run those numbers against your purchase, with closing costs and financing layered in, in our NYC buyer closing cost calculator. If you are selling at the same time, the NYC seller closing cost calculator shows the other side of the transaction.

FAQ

Who pays the NYC mansion tax, the buyer or the seller?

The buyer pays the mansion tax in every standard NYC residential closing. It is the buyer's closing cost, due at closing, and is separate from the down payment. Sponsor (new-development) contracts sometimes restate this assumption in writing, but the cost is still borne by the buyer.

Does the mansion tax apply to co-ops?

Yes. The mansion tax applies to qualifying residential sales of $1 million or more, including co-op apartments, even though a co-op transfer is technically the sale of shares rather than real property. The tax is based on the contract price.

Is the mansion tax marginal, or does the rate apply to the whole price?

The mansion tax is a cliff, not a marginal tax. The rate for your bracket applies to the entire purchase price. A $2 million purchase pays 1.25% on $2 million ($25,000), not 1.25% only on the dollar above $2 million. This is why prices cluster just below each bracket edge in the Manhattan market.

What is the highest NYC mansion tax rate?

The top rate is 3.9% on residential purchases of $25 million or more. That includes the 1% New York State base and the additional NYC progressive layer enacted in the 2019 state budget. The rates have not changed in the 2026-27 budget passed in May 2026.

Is the mansion tax the same as the pied-à-terre tax?

No. The mansion tax is a one-time transfer tax paid by the buyer at closing, based on purchase price. New York's pied-à-terre tax, passed on May 27, 2026 and effective July 1, 2026, is an annual surcharge paid by owners of non-primary-residence homes, based on the NYC Department of Finance valuation. The two can apply to the same property in different ways.

Can a buyer reduce the mansion tax by negotiating below a bracket?

Often, yes. Because the rate applies to the full price, a small price reduction across a bracket edge can save a disproportionate amount of mansion tax. Buyers regularly negotiate from a list price just above a bracket down to a price just below it. Allocating inclusions like furniture, parking, or storage in a separate bill of sale at fair market value is another lever, but it must be handled with the attorneys.

Elevated Advisement represents buyers and sellers across Manhattan, including the high-end transactions where the mansion tax bracket cliffs do the most work. To talk through a specific purchase or sale, get in touch.

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