New York Governor Kathy Hochul has proposed a yearly tax surcharge on second homes in New York City valued at $5 million or more, aiming to raise $500 million annually to address the city's $5.4 billion budget deficit. The surcharge would target ultrawealthy individuals who primarily live outside the city and don't pay state or city income taxes.

The proposal represents a shift for Hochul, who has opposed raising taxes on high earners and large corporations. Her aides say the pied-à-terre tax is more palatable because it focuses on part-time residents who own expensive properties that often sit empty. The exact rate structure hasn't been finalized, but aides suggest a sliding scale where higher-value properties face steeper taxes.

This isn't the first attempt to tax luxury second homes in New York. Similar proposals have failed in the past due to opposition from real estate developers who argue such taxes would hurt the city's economy and reduce its attractiveness to wealthy buyers. The current proposal comes as Mayor Zohran Mamdani and city leaders seek state assistance to close a massive budget gap while Hochul remains wary of broader tax increases that could drive wealthy residents to other states.