The rates are tiered: 1% at $1M - $1.99M, 1.25% at $2M - $2.99M, 1.5% at $3M - $4.99M, 2.25% at $5M - $9.99M, 3.25% at $10M - $14.99M, 3.5% at $15M - $19.99M, 3.75% at $20M - $24.99M, and 3.9% at $25M+. These are applied to the full purchase price once the threshold is crossed - not just the amount above it. The cliff effect at each tier creates pricing dead zones that savvy sellers avoid.
What is colloquially called "the mansion tax" is actually two stacked taxes: a base 1% mansion tax applying to residential purchases of $1M or more, plus a supplemental tax on NYC residential purchases of $2M or more that runs "an incremental rate between .25% and 2.9% based on the purchase price" (tax.ny.gov). At $5M, the total is 1% (base) + 1.25% (supplemental) = 2.25%. Quoting only the supplemental component in isolation is what produces rate confusion.
From the seller playbook: Mansion Tax Tier Engineering
This is general information, not legal, tax or accounting advice. Every situation is different. Talk to a licensed attorney, accountant or tax professional before you act.
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