What Is the Metropolitan Commuter Transportation Mobility Tax?
Understand your financial obligations under the Metropolitan Commuter Transportation Mobility Tax with this guide to the distinct rules for employers and the self-employed.
The Metropolitan Commuter Transportation Mobility Tax (MCTMT) is a tax on certain employers and self-employed individuals in a specific part of New York. Established by Article 23 of the Tax Law, its purpose is to fund the Metropolitan Transportation Authority (MTA). The New York State Department of Taxation and Finance administers the tax and directs the revenue to the MTA. This is a separate obligation from other payroll or income taxes.
The MCTMT applies to businesses based on their activities within the designated transportation district. For employers, the tax is based on payroll expenses, while for self-employed individuals, it is based on net earnings. The tax is a liability for the business or self-employed person, not a deduction from an employee’s wages.
Who is Subject to the MCTMT
Liability for the MCTMT depends on a taxpayer’s location and financial thresholds. The geographic area is the Metropolitan Commuter Transportation District (MCTD), which includes the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, Richmond (Staten Island), Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester. Any employer or self-employed person in these counties may be subject to the tax.
Employers who conduct business in the MCTD are subject to the tax if their total payroll expense for all covered employees exceeds $312,500 in any calendar quarter. This threshold applies to the total payroll within the district, not on a per-employee basis.
Self-employed individuals, including partners, must pay the MCTMT if their net earnings from self-employment allocated to the MCTD are more than $150,000 for the tax year. This applies to income from business activities performed within the twelve-county district.
Certain entities are exempt from the MCTMT. These exemptions include agencies of the U.S. federal government, the United Nations, some public school districts, and eligible educational institutions. Interstate agencies and federally chartered credit unions are also not required to pay this tax.
Calculating the Tax Liability
The MCTMT calculation differs for employers and self-employed individuals. For employers, the tax is based on their quarterly payroll expense, which includes total wages and compensation for services in the MCTD. The tax structure is tiered, with rates increasing as payroll expense grows.
The tax rates for employers are based on quarterly payroll expense:
- Over $312,500 but not over $375,000: 0.055%
- Over $375,000 but not over $437,500: 0.115%
- Between $437,500 and $2,500,000: 0.60% in Zone 1 (New York, Bronx, Kings, Queens, and Richmond counties) and 0.34% in Zone 2 (Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester counties).
- Exceeding $2,500,000: 0.895% in Zone 1 and 0.635% in Zone 2.
For self-employed individuals, the calculation is based on net earnings from business activities within the MCTD. Unlike the tiered system for employers, self-employed individuals are subject to a single tax rate if their annual net earnings from the district exceed the $150,000 threshold.
The tax rate for qualifying self-employed individuals is 0.34% of their net earnings attributable to the MCTD. For example, a consultant with $200,000 in net earnings from the MCTD would have a tax liability of $680.
Filing and Paying the Tax
The filing procedures for the MCTMT are different for employers and self-employed individuals. Employers must file and pay the tax quarterly, with payments due on or before the last day of the month after the quarter ends. The deadlines are:
- April 30
- July 31
- October 31
- January 31
Employers report their MCTMT liability on their quarterly combined withholding, wage reporting, and unemployment insurance return, Form NYS-45. This form consolidates various payroll-related tax obligations into a single filing. The New York State Department of Taxation and Finance requires electronic filing for businesses through its Online Services portal.
Self-employed individuals handle their MCTMT obligations annually when they file their personal New York State income tax returns. The tax is calculated and reported using Form IT-203-M, Metropolitan Commuter Transportation Mobility Tax for Self-Employed Individuals. This form is an attachment to their main state income tax return, such as Form IT-201 for residents or Form IT-203 for nonresidents.
The MCTMT amount is included with their total state tax liability and paid with their regular income tax payment. If an individual makes estimated tax payments, they should include their anticipated MCTMT liability in those calculations to avoid underpayment penalties.