NEW YORK – New York City Mayor Zohran Mamdani has kicked off a heated fight in Albany and at home. Just six weeks into the job, he is asking state lawmakers to approve a 2% increase in personal income taxes for residents who earn more than $1 million a year.
Mamdani says the city inherited a serious budget problem, so he wants a long-term fix. However, business groups, several lawmakers, and conservative voices warn that the plan could push high earners to leave the city faster.
Before becoming mayor, Mamdani served in the New York State Assembly and represented Astoria in Queens. He took office on January 1, 2026, as the city’s 112th mayor. He is also the first Muslim and South Asian mayor, and one of the youngest in modern city history.
During the campaign, he promised big changes aimed at making life cheaper for working New Yorkers. Those promises included free bus service, tuition-free college, and more investment in public transit. To pay for it all, Mamdani has repeatedly argued that top earners and large companies should pay more.
On February 11, Mamdani testified at a New York State Senate budget hearing, a day many locals call “Tin Cup Day.” During that appearance, he asked Albany to approve both the millionaire tax hike and a higher combined corporate tax rate, topping 22%.
He said a person making $1 million a year can handle an extra $20,000 in taxes. He also framed the increase as a steady source of revenue that could help balance the books without cutting services.
“The wealthiest individuals and most profitable corporations should contribute a little more so that everyone can live lives of dignity,” Mamdani told lawmakers. He pointed to recent improvements in the city’s numbers. For example, the projected shortfall dropped from about $12 billion to roughly $7 billion.
He credited stronger-than-expected Wall Street bonuses, cost savings, and updated revenue forecasts. Still, he said the city remains “on a ledge.” In his view, the tax hike could cover close to half the remaining gap while also supporting his broader agenda.
Under the plan, the city’s local income tax rate for top earners would rise to 5.86%. As a result, the combined state and city marginal rate would hit 16.76%, on top of the federal top rate of 37%. That would put New York City’s tax burden on high-income residents near the top nationally.
Critics Warn of a Bigger Millionaire Exodus
Opponents quickly argued the plan could backfire. For years, business groups and many Republicans have blamed New York’s high taxes for people moving out. Recent data has shown the city’s share of the nation’s millionaires shrinking. Some estimates also tie about $3 billion in lost yearly revenue to wealthy residents relocating to lower-tax states such as Florida and Texas.
During the hearing, State Sen. Monica Martinez, a Democrat from Suffolk County, pressed Mamdani on the issue. She called his brush-off of flight concerns “a little disingenuous,” given recent trends. Meanwhile, Senate Republicans, including Thomas O’Mara, said higher taxes could scare off the taxpayers and employers the state depends on.
Cable news and major outlets have repeated those warnings. Fox News aired a segment where New York Post columnist Miranda Devine criticized the plan and pointed to the “potential exodus” of wealthy residents.
The New York Post also argued the tax hike would worsen out-migration. At the same time, POLITICO reported that Gov. Kathy Hochul’s long-standing resistance to new taxes on the rich has gained support, partly because the city’s finances look better than expected, even if risks remain.
Mamdani has rejected the idea that a tax increase will empty the city. In earlier interviews, he said these same warnings appear every time progressives propose higher taxes on top earners.
Supporters also say the scale of millionaire migration gets overstated. They point out that many wealthy residents have deep ties to New York through jobs, families, and social networks. One forecast said the change could still raise close to $4 billion, even if some high earners move.
What This Fight Means for New York’s Next Chapter
This tax battle taps into bigger tensions in post-pandemic New York. Remote work, empty office buildings, and high living costs have already pushed many middle-class families to look elsewhere. Mamdani says his plan takes pressure off working people. In other words, he wants to fund affordability programs instead of filling the gap with service cuts.
Still, skeptics say the city is taking a gamble. New York already ranks high in many lists of combined corporate tax rates. Because of that, critics argue that raising rates even more could cool investment and slow hiring. Groups such as the Citizens Budget Commission and the Empire Center for Public Policy have also warned that higher taxes could weaken the city’s economic base.
For now, the proposal faces a tough path. Hochul has repeatedly opposed higher taxes on high earners and corporations. On top of that, any change to New York City’s income tax requires state approval. Mamdani’s hard push has also created tension with moderates in his own party. Some City Council members say a “tax-the-rich agenda” is taking over budget talks.
As the state budget talks move forward, this plan has become an early test of Mamdani’s administration. Supporters see it as a fair way to stabilize city finances and pay for new public programs. Opponents see it as a move that could drive away the very taxpayers the city relies on.
