Estate Tax Cut Proposal Left Out of State Budget
Mayor Zohran Mamdani's office floated slashing New York's estate tax exemption as the city faced a $5.4 billion deficit.
Updated on Nov. 12, 2026 in Financial Planning
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New York Mayor Zohran Mamdani's office proposed cutting New York State's estate tax exemption from more than $7 million to $750,000 in a March 2026 memo to state lawmakers. The proposal was not included in the $268 billion state budget Gov. Kathy Hochul signed in late May.
Why it matters
The proposal was offered as a way to raise revenue as New York City faced a $5.4 billion budget deficit, and changing the estate tax would require the Legislature to pass a bill and the governor to sign it. Because the idea was left out of the enacted budget, estate tax rules for New York residents remain unchanged for now.
The proposal would have cut the exemption by nearly 90%, from more than $7 million to $750,000, and raised the top rate from 16% to 50%. Current rates start around 3% and climb to 16%, applying only to estates above $7.35 million.
The players
Zohran Mamdani
Mayor of New York City, whose office proposed the estate tax cut as one of several revenue ideas to address the city's budget deficit.
Kathy Hochul
Governor of New York, who signed the $268 billion state budget in late May without the estate tax proposal.
Americans for Tax Reform
A national advocacy group that opposes tax increases, and which is associated with pushing back against estate tax proposals.
The details
Mamdani's office sent state lawmakers a memo in March with nearly a dozen revenue ideas, including the estate tax change. Gov. Kathy Hochul, the state Senate and the Assembly left the proposal out of their budget plans this spring, and New Jersey had repealed its own estate tax in 2018.
Timeline
2018: New Jersey repealed its estate tax.
March 2026: Mamdani's office sent revenue ideas, including the estate tax cut, to state lawmakers.
Spring 2026: Hochul, the Senate and the Assembly left the estate tax proposal out of their budget plans.
Late May 2026: Hochul signed the $268 billion state budget without the estate tax change.
January 2027: New York's next budget fight is expected to begin.
Market Dynamics
New Jersey repealed its estate tax in 2018, and retirees have relocated to New Jersey counties such as Ocean and Monmouth, making New York's proposed increase a point of divergence between neighboring states. Federal estate tax applies only above $15 million per person, so state-level rules remain a key factor for households near the New York border.
For New York residents with estates above $7.35 million, the current estate tax rules remain in place for now. Families with property near the New Jersey border should review how state estate taxes could affect their estate plans.
The takeaway
Estate planning depends heavily on state rules, so reviewing your exposure before the next New York budget cycle can help you plan ahead.
What happens next
New York's next budget fight begins in January 2027, when Hochul is expected to present her plan early in the year, with the budget due April 1.
Further reading
For more on how estate taxes affect long-term planning, explore Financial Planning coverage.
Source note: This article includes information reported by Shore News Network.
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