December 12, 2025
New York City’s housing crisis demands large-scale development. But the newest tax incentive, Real Property Tax Law 485-x, is producing a wave of small buildings and fewer homes overall, even though it was designed to incentivize the development of more affordable housing.
The 485-x program was created in 2024 to replace the expired 421-a tax exemption and encourage developers to build new mixed-income housing across all five boroughs. It offers developers property tax exemptions lasting decades if they meet affordability requirements and other conditions.
The goals are straightforward: cut taxes for developers who build mixed-income housing, and boost supply in a city that desperately needs it. Despite good intentions, 485-x isn’t delivering on its promise at scale — at least not yet.
A key recent fact sheet from city housing officials shows that no projects over 99 units have been approved through 485-x yet.
All housing applications under the program so far are for buildings with 99 units or fewer, even though larger buildings are what would move the needle on NYC’s housing shortage.
At the same time, the number of 99-unit projects has skyrocketed, a sign that developers are actively avoiding thresholds that trigger costly requirements.
1. Large projects are too expensive to build. Wage mandates for 150+ unit buildings add millions to construction costs.
2. Revenue drops for big buildings. Deeper affordability requirements reduce the rental income needed to make projects pencil.
3. Smaller buildings avoid the costliest rules. Projects under 100 units face no wage standards, pushing developers to stay below the thresholds.
The result? No large mixed-income projects. Developers are filing 99-unit buildings instead of the high-impact developments NYC needs.
Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
