Need-to-know changes to the metropolitan commuter transportation tax
Effective July 1, 2023, the metropolitan commuter transportation mobility tax (MCTMT) top tax rate will increase for some employers and individuals. In addition, recent legislation made a number of critical changes to the MCTMT that both employers and employees should understand.
The MCTMT is imposed on certain employers and self-employed individuals engaging in business within the metropolitan commuter transportation district. The tax generally applies to those employers that are required to withhold state taxes and have a payroll expense exceeding $312,500 in any calendar quarter. ‘Payroll expense’ is defined as the total wages and compensation subject to federal social security tax without regard to the annual social security wage limit. Self-employed individuals, including partners, must generally pay the tax when net earnings from the district exceed $50,000. The district includes the five counties of New York City (New York (Manhattan), Bronx, Kings (Brooklyn), Queens, and Richmond (Staten Island)), and the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess and Westchester.
New for 2023 and beyond
Pursuant to New York Senate Bill 4008C/Assembly Bill 3008-C, approved by Gov. Kathy Hochul in early May, the MCTMT highest tier rate will increase from 0.34% to 0.60% for employers conducting business in the five New York City counties, i.e., New York (Manhattan), Bronx, Kings (Brooklyn), Queens and Richmond (Staten Island), effective July 1, 2023. The highest tier rate applies to employers who have a payroll expense exceeding $437,500. The top tier rate and payroll expense threshold for the remaining counties in the district remains unchanged at 0.34% and $437,500, respectively.
The bill will also increase the MCTMT top tax rate imposed on the net earnings of self-employed individuals conducting business in the New York city counties from 0.47% to 0.60% for tax years beginning on or after Jan. 1, 2024. The $50,000 earnings threshold remains unchanged.
The following chart summarizes the MCTMT employer rate changes effective July 1, 2023.