Estate Taxes Don’t Start With the Middle Class—But They Rarely Stay That Way

Estate Tax numbers today

• In the United States the median estate (most realistic “average person”) is roughly $190K – $410K
• The average estate is about $1 million. But this number is misleading, because a small number of very wealthy people pull it way up.
• New York City homeowners estimated median homeowner estate: about $850K. Based on:
• Home equity: ~$400K – $800K
• Retirement + savings: ~$150K – $400K
• New York City homeowners estimated mean (average) homeowner estate: about $2.5MM. Based on:
• Brownstones, co-ops, and condos worth $2M–$10M+
• Long-held properties with massive appreciation
• Dual-income professional households

So, as you can see, most people's estates fall well under the federal ($13.6MM) and NY state ($6.9MM) thresholds for estate tax. Thus, inheritance tax has been a nonissue even in pricey NYC. That was until NYC Mayor Zorhan Mamdani learned of a mid-year budget gap of $2.2 billion and a total of over $12 billion in gaps expected over the next two years.

Key Aspects of NYC Mayor Zorhan Mamdani's March 2026, Estate Tax Proposal.

• Threshold Reduction: The proposal seeks to lower the state’s estate tax exemption threshold from the 2026 level of $7.35 million down to $750,000.
• Rate Increase: The top estate tax rate would rise from 16% to 50%
• "Cliff" Effect: The proposal includes a "cliff" feature, meaning if an estate exceeds $750,000, the 50% rate could apply to the entire taxable estate, rather than just the amount exceeding the threshold.

Even as NYC mayor, Mamdani does NOT have the authority to create or change an estate tax. Estate taxes are set at the state level (New York State) and must be approved by the legislature and signed by the governor. He can propose, pressure, and negotiate, but not enact. Howevere NYS Governor Kathy Hochul’s stance has been: She has NOT endorsed these types of aggressive tax increases

• She has pushed back on raising taxes, especially on high earners
• Her concern: higher taxes could drive wealthy residents out of New York
• she knows New York residents—many from the NYC metro area—moved to Florida, taking roughly $13.8 billion in income with them.

Getting the legislature and Governor Kathy Hochul to sign off on Mamdani’s proposed estate tax hike seems unlikely. New York City is already one of the most heavily taxed places in the United States, and those high taxes affect more than just individuals.

Businesses are leaving New York City in significant numbers, driven by high taxes, strict regulations, and high operating costs. Nearly 5,000 businesses were reported to have closed or left the city in recent periods. Major financial firms and tech companies have also been relocating to states like Florida and Texas, with investment firms managing trillions of dollars in assets shifting out of New York and California over the past few years.

When those businesses leave, they take jobs, income, and long-term tax revenue with them—often reshaping the economic base that policies like these depend on.

And the Bad News Continues for NYC

When Policy Pushes Families Toward the Exit: NYC Estate Tax in Flux

The estate tax impact on the middle class in New York City is no longer theoretical. Lower proposed thresholds could push more families into taxable territory—leaving More people to seriously consider relocation as a financial necessity rather than a choice.

And yet, there are clear warning signs. At a Politico event in March 2026, Kathy Hochul admitted the state’s tax base has “eroded,” even pointing to Palm Beach as a place to see who might be brought back.

At the same time, Zohran Mamdani is proposing a more punitive estate tax system, including a “cliff provision” that could dramatically increase tax liability once an estate crosses the threshold. I can tell you that many of my coworkers would be directly and significantly affected by Mamdani’s proposal. Faced with such steep changes, they will be forced to take decisive action to protect their families and assets.

The contradiction is hard to ignore: New York appears to be acknowledging taxpayer flight while simultaneously advancing policies that could accelerate it.

To me, it borders on a kind of policy-level insanity.