A proposed New York tax on all-cash home purchases above $1 million in New York City is likely to be dropped from the final state budget, according to people familiar with negotiations in Albany, marking a significant setback for Mayor Zohran Mamdani’s effort to close a multibillion-dollar city budget gap without raising broad income or corporate tax rates.

Bloomberg first reported the likely collapse Thursday morning, citing officials involved in the negotiations. The proposal would have imposed a 1% levy on buyers purchasing residential properties in cash above the $1 million threshold and was projected to generate roughly $160 million annually for New York City.

The measure formed part of the broader $8 billion state aid framework Gov. Kathy Hochul unveiled earlier this month in support of Mamdani’s proposed $124.7 billion city budget for the fiscal year beginning July 1.

Assembly Speaker Carl Heastie confirmed last week that the proposal was “part of the plan to help close the city’s deficit,” while State Senator James Skoufis, a member of the Senate Finance Committee, acknowledged the levy had become part of the wider budget negotiations.

But more than six weeks after the April 1 budget deadline, lawmakers familiar with negotiations now say the proposal is unlikely to survive the final vote as resistance from real estate interests and moderate Democrats intensified.

The policy argument behind the tax centered on how New York currently treats cash buyers versus financed buyers.

According to the nonprofit Center for New York City Neighborhoods, more than 60% of the nearly 18,000 home sales completed in New York City during the first half of 2025 were all-cash transactions, with a median purchase price of roughly $939,000.

In Manhattan’s luxury market, nearly nine out of every ten transactions above $3 million closed entirely in cash.

Mamdani’s office and progressive lawmakers argued that wealthy cash buyers — often institutional investors, second-home owners or foreign purchasers — effectively avoid the city’s mortgage-recording tax, which generates approximately $812 million annually but applies only to financed transactions.

The opposition came swiftly from the real estate industry, brokerage firms and centrist Democrats increasingly wary of Mamdani’s broader tax posture.

James Whelan, president of the Real Estate Board of New York, warned earlier this month that the city’s budget problems “will not be solved by more taxes,” adding that increasing transaction costs would discourage sales activity and potentially reduce overall revenue collected by the city, state and MTA.

Lobbying from broker associations and real estate trade groups intensified over the past two weeks as lawmakers weighed the proposal’s economic impact against the city’s fiscal needs.

The collapse also arrives during a broader wave of pushback against Mamdani’s economic agenda.

Earlier Thursday, JPMorgan Chase chief executive Jamie Dimon warned on Bloomberg Television that the mayor’s broader tax proposals risk damaging New York’s competitiveness as a business center.

“People think that somehow being anti-business is going to help the city, it’s not,” Dimon said.

Jeff Bezos separately criticized the administration this week on CNBC over New York City’s $43 billion school budget and broader spending structure.

Meanwhile, the Multicultural Business Coalition, an immigrant-led organization representing more than 50 chambers of commerce, has assembled a war chest exceeding $1 million to oppose Mamdani’s proposed city-owned grocery store initiative and is weighing legal action against the city.

The likely demise of the cash-purchase tax leaves another major proposal still alive inside negotiations: the pied-à-terre surcharge outlined by Hochul last week.

That measure would impose annual surcharges ranging from 0.8% to 1.05% on one- to three-family homes valued above $5 million, along with higher assessments on luxury condos and co-ops beginning at $1 million in market value. State officials estimate the proposal could generate roughly $500 million annually if approved.

The practical implications now move in two directions.

For City Hall, the loss of $160 million is not catastrophic on its own, but it reinforces a broader problem confronting Mamdani’s fiscal strategy. Each revenue proposal rejected in Albany increases pressure on the remaining tax measures — including the proposed 11.5% corporate tax rate and the 2% surcharge on residents earning more than $1 million annually.

Every failed revenue line eventually forces a choice between spending cuts, additional borrowing or new taxes elsewhere.

For the real estate market, however, the retreat is likely to produce short-term relief.

Luxury brokers said transaction activity slowed in March and April as buyers waited to see whether the levy would become law. With the proposal now appearing unlikely to survive, analysts expect some sidelined purchasers to move forward with transactions before future versions of the tax potentially re-emerge.

The Hamptons, Hudson Valley and several upstate luxury markets that had also been discussed in potential statewide expansions of the levy could similarly benefit from a rebound in transaction activity.

Politically, the episode reveals the limits of Mamdani’s support inside Albany even on comparatively targeted tax measures.

Unlike broader income or corporate tax increases, the cash-purchase levy focused almost exclusively on wealthy buyers and sought to address what supporters viewed as an imbalance in the existing mortgage-tax system.

That even this narrower proposal appears headed for defeat underscores how cautious the center of New York’s Democratic establishment remains toward large-scale tax expansion tied to Mamdani’s agenda.

The final state budget is expected before the end of May.

Neither Mamdani’s office nor Hochul’s office had publicly commented on the apparent collapse of the proposal by Thursday afternoon.

JBizNews Desk

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