New York City Mayor Zohran Mamdani has proposed a 2% income tax increase on residents earning over $1 million annually, along with a higher state corporate tax rate, as part of efforts to address the city’s budget shortfall, Reuters reported.

Axar.az reports that, testifying before the New York State Senate’s 2026 budget hearing, Mamdani said the city’s projected deficit has been reduced from $12 billion to $7 billion through spending controls, updated revenue forecasts, and use of reserves. However, he warned that the city remains financially vulnerable.

Mamdani argued that wealthier individuals and profitable corporations should contribute more, stating that the proposed 2% tax hike could close nearly half of the remaining deficit. He previously campaigned to raise the corporate tax rate from 7.25% to 11.5%.

Any tax increase would require approval from Democratic Governor Kathy Hochul, who has repeatedly opposed raising taxes, saying the state can invest in its future without tax hikes or increasing debt.

The city’s preliminary budget is expected to be released on Tuesday.