NYC Council Projects $1.7 Billion Increase in Tax Revenues Over Mayor's Forecast for Fiscal Years 2025 and 2026

29 May 2025

Mayor Eric Adams (photo: Michael Appleton/Mayoral Photography Office)

NEW YORK - Ahead of the New York City Council’s final hearing on the Mayor’s Fiscal Year 2026 (FY26) Executive Budget with the Office of Management and Budget (OMB), the Council released its May 2025 Economic and Tax Revenue Forecast. This updated forecast estimates that the City will collect $1.7 billion more in tax revenues for Fiscal Years 2025 and 2026 than OMB estimated in its FY26 Executive Budget.

The Council's revised forecast projects $1.3 billion more in tax revenues for FYs 2025 and 2026 than the Council estimated in February, primarily due to stronger personal income and unincorporated business tax collections. Despite this improvement, the forecast still represents slower growth in tax revenues than the City experienced in FYs 2010 to 2019.

“The Council’s new economic and tax revenue forecast projects continued modest economic growth and an estimated $1.7 billion more in city revenue than OMB has forecasted for Fiscal Years 2025 and 2026, which is even more revenue than the Council’s previous forecast,” said Speaker Adrienne Adams and Finance Committee Chair Justin Brannan. “New York City’s economy is resilient, but the Trump administration’s volatile economic and tariff policies are creating needless uncertainty that is slowing national economic growth. As the city budget process continues, the Council remains focused on targeting priority investments to advance the health and safety of our city. We will continue to safeguard our city’s fiscal strength in the midst of Trump’s chaos, while ensuring our budget invests in the needs of New Yorkers.”

The Council projects that the City’s annual tax revenue growth rate will remain at 4.5%, consistent with its prior forecast, though the timing has shifted to expect higher revenues in 2025 and slightly weaker collections in 2026 and subsequent years. U.S. economic growth is expected to moderate due to increased uncertainty from the federal policy landscape, including the Trump Administration’s tariffs, and the combined cooling impacts of elevated consumer price pressures with prolonged higher interest rates on economic activity. However, domestic demand continues to show resilience since consumers and businesses are pulling some purchases forward to avoid tariff-related costs.

Prior to the tariffs and trade policy turmoil, the national economy was expected to grow at a healthy rate of approximately 2.1% this year. The Council anticipates U.S. economic growth to moderate to 1.3% in 2025 due to tariffs, while consumer spending will cool down in response to a softening labor market and still-elevated borrowing costs. Inflation, as measured by the Core Consumer Price Index, is expected to reflect a price adjustment due to tariffs in 2025, before it starts to gradually decline from its current 2.8% to 2.1% by the beginning of 2027. The Federal Reserve has continued to keep policy rates steady for several months due to volatility and price pressures caused by tariffs and uncertainty surrounding federal fiscal policy. This slower pace of rate reductions will maintain high interest rates longer than previously anticipated, weakening investment