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In our third installment recapping states’ efforts to impose new taxes on high net worth individuals, we provide updates on Washington’s Millionaires Tax, New York State’s efforts to tax New York City property, and New York City’s proposed property tax hike.
Washington’s Millionaires Tax
Washington’s Millionaires Tax is set to take effect on January 1, 2028. If the tax, which is currently being challenged in court as unconstitutional, is deemed constitutional, it will impose a 9.9% income tax on individuals with annual Washington adjusted gross income of $1 million or more.
In addition to the constitutional challenge to the Millionaires Tax, opponents to the tax filed a writ of mandamus with the Washington Supreme Court asking the court to direct the Washington Secretary of State to put the tax to a vote in November 2026. On May 4, 2026, the Supreme Court denied the petitioners’ request, determining that the Millionaires Tax falls within the Washington Constitution’s referendum exception for laws “necessary for the … support of the state government” because it “generates revenue for existing state institutions.” Accordingly, the Millionaires Tax is still set to go into effect on January 1, 2028, unless the tax is found to be unconstitutional through the ongoing challenge.
New York State’s Second Home Tax and Tax on Homes Bought in Cash
As we addressed in our April 29, 2026 blog post, New York Gov. Kathy Hochul is still pursuing a property tax surcharge, known as the “pied-à-terre tax,” on second homes in New York City worth over $5 million. New York State is also considering imposing a tax on New York City homes purchased in cash for $1 million or more. According to Bloomberg Law, the tax is expected to raise $160 million. The details of both taxes are still under negotiation.
New York City’s Property Tax Hike
New York City residents received some welcome news when, on May 12, 2026, Mayor Zohran Mamdani released the city’s $124.7 billion fiscal year 2027 budget, which did not include the 9.5% property tax hike that the mayor proposed in February 2026.
Our Perspective
The developments in Washington and New York fit into a broader pattern that we have recently seen: states and localities continue to explore targeted tax measures that focus on high-value property and affluent taxpayers when broader tax increases prove politically difficult and unpopular.
For clients with significant New York City real estate exposure, now is a good time to review how those holdings fit into their overall tax, residency, and estate planning picture. Even if New York’s proposals change or do not advance, this broader trend of targeted taxes is one to watch closely.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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