New York will become the first U.S. city to impose congestion pricing, seen as a key weapon against global warming, following lawmakers' approval on Monday of a state budget to fund the plan.
Drivers will have to pay to drive in busy midtown Manhattan, one of the city's five boroughs, as part of an effort to reduce the number of cars and invest in public transit such as subways, officials said.
Fewer cars means lower emission of carbon dioxide, the leading gas that causes global warming, experts say.
Fewer cars also means a better traffic flow, which creates lower emissions than cars idling, they say.
"You have to get fewer cars driving into Manhattan," New York Governor Andrew Cuomo said on Sunday.
"The traffic is so bad. I can't tell you how many days myself, I just get out of the car and walk, because it's so much faster."
The plan is part of the state's $175 billion budget that also includes a ban on disposable, single-use plastic bags.
New York becomes the first major U.S. city to follow the lead of London, which began levying a congestion charge on vehicles driving into the city center in 2003, and a handful of other international locations including Stockholm and Singapore.
The system has succeeded in reducing air pollution and traffic in London, which currently charges drivers £11.50 ($15.24) per day during weekday business hours.
After introduction of the congestion charge, bus ridership in central London increased by 37 percent in the first year, and traffic congestion dropped by about a quarter, research found.
Beginning in 2021, New York drivers will likely be charged more than $10 (7.70 British pounds) to travel below 60th Street in Manhattan, essentially south of Central Park in an area that includes Broadway theaters, Wall Street banks and high-end shopping.
The precise amount of the fees will be decided later as will be the possibility of exemptions for taxis, ride-sharing drivers and other issues, officials say.
While an earlier campaign for congestion effort failed more than a decade ago under former Mayor Michael Bloomberg, this effort succeeded in part due to the promise of raising badly needed funds for the deteriorating subway system, experts said.