Metropolitan Commuter Transportation Mobility Tax (MCTMT)

What is MCTMT?

The Metropolitan Commuter Transportation Mobility Tax (MCTMT) is a New York state specific tax that is collected by the New York State Tax Department for the Metropolitan Transportation Authority (MTA). This tax is charged to certain employers and self-employed individuals engaging in business within a Metropolitan Commuter Transportation District (MCTD) zone.

There are twelve counties that benefit from the MTA's services that are divided into two MCTD zones. 

Zone 1 is the five counties comprising the five boroughs of New York City: Bronx, Kings (Brooklyn), New York (Manhattan), Queens and Richmond (Staten Island).

Zone 2 is the seven surrounding counties also serviced by the MTA: Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk and Westchester.

If your business is headquartered in any of these counties or. you have employees located in any of these counties, you may be subject to MCTMT.

When Does the Tax Apply?

Companies are required to pay MCTMT if the aggregate sum of their payroll expense in both MCTD zones exceeds $312,500 for the current calendar quarter. If an employer's payroll expense for a given quarter does not exceed $312,500 in aggregate, they are not subject to the MCTMT for that quarter even if the company was liable in previous quarters.

How is MCTMT Calculated?

As of July 1, 2023, once a company has been found liable for a quarter, the payroll wages will need to be allocated to either Zone 1 or Zone 2 based on the employee's primary work location. Each zone's rate will be calculated independently of the other based on the payroll expense allocated to each.

Zone 1 Rates

Zone 2 Rates

Example: Company A has $500,000 in payroll expenses across Zone 1 and Zone 2 in a calendar quarter. $400,000 of payroll expenses apply to employees located in Zone 1 and $100,000 of payroll expenses apply to employees located in Zone 2. Because the aggregate amount of payroll expense is greater than $312,500, Company A is liable for MCTMT tax.

Zone 1’s payroll expense of $400,000 is over $375,000 but under $437,500 and is assessed at a 0.23% rate. The total MCTMT liability assessed to Zone 1 is $920.

Zone 2’s payroll expense of $100,000 is under $375,000 and is assessed at a 0.11% rate. The total MCTMT liability assessed to Zone 2 is $110.

Company A’s total MCTMT tax liability is $1030 for the quarter.

How is MCTMT Collected and Filed?

Justworks will track your current quarter's payroll expense for each zone to assess your liability, if any, for MCTMT. We collect in real-time based on your previous quarter's liability, so an additional debit may be required at the end of the quarter if there has been a change in rate due to payroll expense.

Justworks will file form MTA-305 quarterly on your behalf. If you are not subject to MCTMT for a given quarter, then an MTA-305 is not required to be filed for that quarter.

Note: Employee contributions to MCTMT are prohibited. An employer cannot deduct any portion of MCTMT from the wages or compensation of an employee.

Exemption from MCTMT

Your business may be exempt from MCTMT if you are:

1. An agency or instrumentality of the United States;
2. The United Nations;
3. An interstate agency or public corporation created pursuant to an agreement or compact with another state or Canada;
4. A federally chartered credit union;
5. A household employer on wages paid to household employees; or
6. Any eligible educational institution.

For more potential exemptions, visit the New York State Tax Department site for MCTMT. Additionally, New York provides a Guide to the MCTMT (Publication 420).

Disclaimer

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.