What Is 485-x? The Program That Replaced 421-a, and What It Asks of a New Building
485-x replaced 421-a in April 2024. The four options, benefit lengths, affordability and wage rules, and the June 2034 and June 2038 deadlines.
Updated September 2026. 485-x is open and taking filings. A project qualifies if construction commences after June 15, 2022 and on or before June 15, 2034, and completes on or before June 15, 2038. HPD is currently letting applicants file the units workbook on either the 2025 or the 2026 Area Median Income, after cutting the studio household factor from 0.7 to 0.6, until the 2027 AMI is adopted. MGNY’s 485-x service page walks the filing sequence.
421-a stopped accepting new starts on June 15, 2022, and until 485-x was adopted on April 20, 2024 New York City had no standing tax exemption for new rental construction. 485-x is the replacement, written into the state budget adopted in April 2024. It sorts projects into four boxes by unit count, location and tenure, each with its own price.
What is 485-x?
485-x is a New York State real property tax exemption for new residential construction in New York City. Its formal name is the Affordable Neighborhoods for New Yorkers Tax Incentive program, which HPD shortens to ANNY. Real Property Tax Law Section 485-x was adopted April 20, 2024, and HPD adopted the implementing rules, Chapter 63 of Title 28 of the city rules, on December 16, 2024. Searches often drop the hyphen and write 485x or “485x tax abatement”; the statute makes qualifying buildings “exempt from real property taxation”, so 485x is an exemption, not an abatement. Governor Hochul’s April 22, 2024 release called it a ten-year program building on the now-expired 421-a incentive. Eligible projects are new multiple dwellings and eligible conversions of six or more dwelling units. Hotels are excluded.
It is an exemption, not an abatement: the owner keeps paying tax on the land and improvements as assessed in the year before commencement, and the exemption covers what the construction adds. Very large rental projects are the one exception, during the construction period. NYC tax abatements explained separates the two.
Which buildings qualify for 485-x, and how long does the exemption run?
The statute assigns each project one of four affordability options, and the option fixes both the benefit length and the affordable set-aside. It is chosen in the first submission to HPD. Zone A is Manhattan south of 96th Street plus five mapped areas in Brooklyn and Queens; Zone B is nine more.
| Option | Project | Benefit | Construction period | Affordability |
|---|---|---|---|---|
| A, large rental | 100 or more units | 35 years | up to 3 years | 25% of units, weighted average 80% of AMI |
| A, very large rental | 150 or more units, in Zone A or Zone B | 40 years | up to 5 years in Zone A, 3 in Zone B | 25% of units, weighted average 60% of AMI |
| B, modest rental | 6 to 99 units | 35 years | up to 3 years | 20% of units, weighted average 80% of AMI |
| C, small rental | 6 to 10 units, outside Manhattan, on a zoning lot that permits no more than 12,500 sq. ft. of residential floor area | 10 years | up to 3 years | at least half the units rent stabilized |
| D, homeownership | 6 or more units, outside Manhattan, assessed valuation no more than $89 per sq. ft. on the first assessment after completion | 20 years | up to 3 years | owner primary residence for five years |
Inside each term the exemption is not flat. The construction period is fully exempt in every option. The 35-year benefit runs at 100 percent for 25 years after completion; for its last 10 years a large rental stays at 100 percent while a modest rental drops to its affordability percentage. The 40-year benefit is 100 percent throughout, and the homeownership benefit is 100 percent for 14 years then 25 percent for six.
What are the 485-x affordability requirements?
They step up with size. A rental of 6 to 99 units sets aside 20 percent of its units at a weighted average of 80 percent of AMI. At 100 units the set-aside rises to 25 percent, and at 150 units inside Zone A or Zone B the average drops to 60 percent. In both options the affordable units may sit in no more than three income bands, and no band may exceed 100 percent of AMI. A small rental under Option C makes no AMI commitment and instead rent stabilizes at least half its units.
The commitment does not expire. For a rental project the restriction period runs, in the statute’s words, in perpetuity: affordable units stay permanently affordable and all restricted units stay permanently rent stabilized. For a homeownership project it ends on the twentieth anniversary of completion. Market units are not stabilized unless they would have been anyway. Affordable units must share the market units’ entrances and common areas, and demolished units must be replaced one for one.
485-x is a tax program, not a zoning rule. Mandatory Inclusionary Housing, enacted March 22, 2016, is the separate zoning requirement that a share of new housing in rezoned medium- and high-density areas be permanently affordable. HPD administers that one too.
What are the 485-x wage requirements?
Two rules apply, and only one turns on unit count. Construction wages begin at 100 units: a project that size falls under Labor Law sections 220 and 220-b and must pay construction employees at least $40 an hour, raised 2.5 percent every July 1 since 2025, so the floor has stepped up twice by September 2026. At 150 or more units in Zone A the floor is the lesser of $72.45 an hour, escalating on the same schedule, or 65 percent of the greatest prevailing rate within a classification. In Zone B it is the lesser of $63 an hour or 60 percent of that rate. Project labor agreement sites are exempt, and a 99-unit project carries no construction wage floor.
Building service wages are the second rule, at prevailing wage for the whole benefit period. Two buildings escape it: one with fewer than 30 dwelling units, and one that is entirely affordable with at least half its affordable units at or below 90 percent of AMI. The New York City Comptroller enforces both sets of wage rules.
When does a 485-x project have to start and finish, and who administers it?
Three dates define eligibility. Construction must commence after June 15, 2022, the day 421-a stopped accepting new starts, and on or before June 15, 2034, and complete on or before June 15, 2038.
The filings run on their own clock. A registration notice is due within six months of the commencement date for projects commencing on or after April 20, 2024; earlier commencements had until December 14, 2024, and filing late can cost up to the full application fee. The application itself goes in no later than one year after the completion date. Every project files an MWBE affidavit and a draft restrictive declaration; Options A and B add a units workbook, a notice of intent to begin marketing and a marketing monitoring contract.
HPD administers the program through its Tax Incentives Programs unit, at [email protected] or (212) 863-6603. Two limits belong in any model: a building on ANNY benefits cannot take any other exemption or abatement, and non-residential space above 12 percent of aggregate floor area cuts the benefit by the excess.
How is 485-x different from 421-a?
421-a(16), the Affordable New York Housing Program, covered projects commencing after December 31, 2015 and on or before June 15, 2022, and it has taken no new start since. Vested projects finish under it: the general completion deadline was June 15, 2026, now passed, and June 15, 2031 applies only to a project on affordability option A, B, D, E or F whose owner filed a letter of intent with HPD by September 12, 2024, an extension the 2024 budget added alongside 485-x. The old program is laid out in what is 421-a.
Three differences carry the weight. The promise is longer: a 421-a restriction period expires 35 years after completion, 40 for the enhanced benefit, while a 485-x rental restriction period runs in perpetuity. The wage rules changed shape: 421-a set wage floors only inside its enhanced affordability areas, $60 an hour in Manhattan, while 485-x sets floors citywide by unit count from 100 units up. And 485-x reaches smaller buildings, with a 10-year small rental option and a 20-year homeownership option, both outside Manhattan.
Uptake has skewed small: HPD reported 118 building registrations as of May 1, 2025, roughly 2,600 units and 540 affordable, averaging under 25 units per building.
What does it cost to ask MGNY?
Nothing. A real person answers at (212) 343-1111, right away, and the consultation is free. You engage us only if you want the application handled for you. MGNY has worked NYC property tax since 2008, with $50M+ in tax refunds secured for owners, 900+ developments with tax abatements secured and $30B+ represented in appeals.
Still deciding which 485-x option a project falls into? Decide before the first permit.
MGNY runs the whole 485-x filing sequence, from registration through the restrictive declaration. Call (212) 343-1111 and we will model the options against your numbers.
The zoning side of a 485-x project sits in our guides to City of Yes, the Universal Affordability Preference and the NYC Zoning Resolution.
Sources: NYC Department of Housing Preservation and Development, 485-x: Affordable Neighborhoods for New Yorkers, and its Inclusionary Housing page, both read September 2026; RPTL § 485-x and RPTL § 421-a, read on the New York State Senate site September 2026; Governor Hochul’s release of April 22, 2024 on the FY 2025 enacted budget agreement; HPD press release 032-25 of May 23, 2025 for the registration counts. MGNY Consulting is a private consulting firm and is not affiliated with the NYC Department of Housing Preservation and Development.
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