Real Estate Industry Consistently Remains NYC’s Largest Source of Tax Revenue
The Real Estate Board of New York (REBNY) recently released its “Invisible Engine” report that provides a highlight of the “critical role the real estate sector plays in generating tax revenues and jobs. Remaining the largest source of locally gathered tax revenue for New York City, the real estate sector consistently accounts for an average of 51% annually in the city’s tax revenue. In 2024, total Real Estate Related Taxes (RERT) contributed by the industry reached a record high of approximately $37 billion — more than doubling the $18 billion since 2010, with locally gathered tax revenue during the same period totaling $429 billion. It has been projected that RERT will exceed $40 billion in Fiscal Year 2025. Commercial property, categorized as Class 4 (office, retail, hotels, and factories) accounted for $13.1 billion of RERT collected last year, despite the ongoing challenges the office market continues to face since the disruption of the COVID-19 pandemic. Multifamily, or Class 2 properties are the second highest contributor to the city’s property tax base, with $13 billion in property tax levies collected. Class 2 and Class 4 property categories combined account for 80% of the $12 billion growth in taxable billable value of all properties per the tentative roll for 2025/2026 released by New York City Department of Finance (DOF) earlier this year.
Additional sources of city revenue generated by the real estate industry come from the collection of fees and fines, which totaled over $650 million in 2024 — more than enough to cover the operation of the entire New York City public library system, or the Department of Parks and Recreation’s annual budget. The real estate industry also provides an “important career pathway for multiple income levels, including high-paying jobs that don’t require a college degree.” There are 297,500 New Yorkers employed within the real estate and construction sectors, equating to about 6% of the city’s 4.8 million workers. However, REBNY’s report further points out that although “through thick and thin, real estate taxes have been a critical component in keeping New York City funded,” unexpected declines in office property values have resulted in recent shortfalls in transfer taxes and mortgage taxes revealing that despite its resilience, the sector is facing long-term adjustments, leading to changes that will have a ripple effect on the rest of the city.