There’s been a surprising amount of talk in recent weeks about New York City’s new pied-à-terre tax, given how many properties might actually be affected.

New York Governor Kathy Hochul announced a revenue estimate of $500 million from 13,000 “second homes” valued at least $5 million. However, according to the state’s Comptroller, revenue will likely be collected from a little over 11,200 properties.

For context, New York City currently boasts about 3.74 million housing units, according to the 2024 Census estimate, of which about 3.38 million are occupied. So the units subject to the tax amount to only 0.3% of the city's housing stock. (NYC itself accounts for about 2.5% of all U.S. housing units.) Across the United States, there are about 146.7 million housing units, so the tax would affect about 0.0076% of all U.S. housing units.

Still, conversations about the tax are making headlines and filling social media spaces. President Trump has also taken an interest, claiming that he will kill it.

The problem? As Andrew Leahey writes, President Trump has few options to block the tax on his own. He cannot simply nullify a state tax by executive order, and federal litigation would face significant procedural and constitutional hurdles, including the Tax Injunction Act. The tax is also structured around whether a property is used as a primary residence rather than the owner’s state of residence, making it more difficult to claim that it discriminates against interstate commerce.

Congress has more room to act because it can use its Commerce Clause authority to preempt certain state taxes that burden interstate commerce, as it has done before. But even that path would be difficult. Congress would need to carefully define the taxes being prohibited, establish a sufficient connection to interstate commerce, expressly preempt state law, and likely override the Tax Injunction Act—meaning there may be a federal solution, but not an easy presidential one.

Congress, however, is currently focused on other matters, such as the Taxpayer Assistance and Service Act, a bipartisan tax-administration package introduced by Senate Finance Chairman Mike Crapo (R-ID) and Ranking Member Ron Wyden (D-OR). The package, which is supported by the National Taxpayer Advocate (NTA) and many tax practitioners (like me), now contains more than 60 provisions.

Among other things, it would codify that an e-filed return or payment transmitted by the deadline would generally be treated as timely, similar to the “mailbox rule” for returns and payments sent through the mail. It would also establish stronger minimum standards and oversight for paid return preparers, one of Wyden's major priorities and a longstanding NTA concern.

One thing it won’t do? Offer previously anticipated relief for Americans living abroad. The Senate Finance Committee narrowed those provisions ahead of its markup.........

© Forbes