Capital gains: Taxed as ordinary income; tax benefit recapture applies at high incomes; New York City tax is additional.
What changed: FY2027 budget adds an annual New York City pied-a-terre surcharge on non-primary homes above $1 million-$5 million from July 1, 2026; the 2025 budget further extended the high-earner surtaxes.
| January 1, 2026 | New York extends high-earner income tax surcharges (2025 budget, A3009) Extends the temporary top rates of up to 10.9% for income above $25 million (9.65% and 10.3% tiers below), keeping New York and New York City among the highest combined rates. | In effect |
| May 28, 2026 | New York FY2027 budget: NYC pied-a-terre surcharge An annual surcharge on New York City homes that are not the owner's primary residence. Condos and co-ops worth more than $1 million face tiered rates of 4%-6.5%, and 1-3 family homes worth more than $5 million face 0.8%-1.3%. | Enacted |
The higher SALT deduction cap opens a larger federal write-off for some homeowners in high-tax areas, but a phase-down above $500,000 of MAGI and regional gaps sharply limit who benefits.
Albany's late budget creates a five-year surcharge on luxury New York City second homes, extends a higher corporate tax rate through 2029 and leaves personal income tax rates unchanged.
Governor Hochul's April 15 proposal would charge non-resident owners of vacant luxury NYC homes an annual surcharge, projected to raise at least $500 million a year, with an exemption for rented units.
New York's estate tax exemption does not phase out gradually. Cross 105% of it and the whole estate is taxed from dollar one, a design that can cost a family hundreds of thousands more than staying just under the line.
California's combined top marginal rate reaches 14.4% and NYC residents face up to 14.776%, even as Georgia, Indiana, Kentucky and six other states cut income tax rates on January 1.
The 2025 tax law cut individual taxes by about $129 billion, but paycheck withholding was never updated, so much of that cut, including the $40,000 SALT cap, arrives as a refund this spring.
Eight states cut individual income tax rates for 2026 while New York extends its temporary surtaxes on high earners, reshaping the state bill for affluent households and anyone weighing a move.
The mayor-elect's proposed surtax on income above $1 million would stack on New York's already steep state and city rates, though it still needs the governor's and legislature's approval.
The Tax Foundation's 2026 State Tax Competitiveness Index shows which states keep the most of a high earner's income, and which state governments took the biggest bites in 2025.
The new deduction limit loses 30 cents for every dollar of income above $500,000, and a faster AMT exemption phaseout from 2026 adds pressure on high earners in high-tax states.