New York MCTMT: Metropolitan Commuter Transportation Mobility Tax

New York is one of the most complex states in the country for payroll compliance, and the Metropolitan Commuter Transportation Mobility Tax (MCTMT) is a prime example of why. Unlike the more familiar payroll taxes — state income tax withholding, SUI, SDI, and PFL — the MCTMT only applies to employers and self-employed individuals operating within a specific geographic area. That geographic limitation, combined with a quarterly payroll threshold that catches many growing small businesses off guard, makes it one of the most commonly missed tax obligations in the state.

This guide explains exactly what the MCTMT is, who owes it, how to calculate it, and how to file — so you don’t end up on the wrong side of a New York State tax notice.

What Is the MCTMT?

The Metropolitan Commuter Transportation Mobility Tax (MCTMT) is a payroll tax imposed on employers and self-employed individuals who operate within the Metropolitan Commuter Transportation District (MCTD). The tax was enacted in 2009 to fund public transportation infrastructure in the New York City metropolitan area, including the MTA (Metropolitan Transportation Authority) system — subways, buses, commuter railroads (LIRR and Metro-North), and bridges and tunnels.

The MCTMT is not withheld from employee wages. It is an employer-paid tax, calculated as a percentage of total payroll expenses for employees who work within the MCTD. The current rate is 0.34% of payroll for employers who meet the quarterly threshold.

Key characteristics of the MCTMT:

• Employer-paid: The MCTMT is the employer’s obligation. You do not deduct it from employee paychecks.
• Geography-based: It only applies to payroll for employees working within the MCTD counties.
• Threshold-based: Only employers with $312,500 or more in quarterly payroll within the MCTD are subject to the tax.
• Funds transportation: Revenue goes to the MTA to support mass transit operations and capital improvements.
• Administered by the NY Tax Department: This is filed with the New York State Department of Taxation and Finance — not the Department of Labor.

Which Employers Are Subject to the MCTMT?

You are subject to the MCTMT if both of the following conditions are true:

1. You are an employer (including for-profit businesses, non-profits, and government entities) that pays wages to employees who perform services within the MCTD.
2. Your total payroll expense for employees within the MCTD is $312,500 or more in a calendar quarter.

The threshold is based on total quarterly payroll for MCTD-based employees only — not your entire company-wide payroll. If you have employees in both MCTD and non-MCTD locations, you only count the wages of employees who work within the district when determining whether you meet the $312,500 threshold.

Once you meet the threshold, the tax applies to all payroll within the MCTD for that quarter — not just the amount above $312,500. It is not a marginal rate. If your MCTD quarterly payroll is $320,000, you owe 0.34% on the full $320,000.

The Metropolitan Commuter Transportation District

The MCTD includes the following counties in New York State:

The MCTD covers all five boroughs of New York City plus seven surrounding suburban counties. These are the counties served by the MTA’s commuter railroad lines (Long Island Rail Road and Metro-North Railroad), the NYC subway and bus system, and MTA-operated bridges and tunnels.

If your employees work in any of these twelve counties/boroughs, their wages count toward the MCTMT threshold and, if the threshold is met, are subject to the 0.34% tax. Employees who work in other New York counties outside the MCTD — such as Albany, Erie, Monroe, or Onondaga — are not included in the MCTMT calculation.

MCTMT Rate and Threshold

The MCTMT rate structure is straightforward:

Important details about the rate and threshold:

• The threshold is per quarter: You evaluate your MCTD payroll each calendar quarter (January–March, April–June, July–September, October–December). If you exceed $312,500 in one quarter but not the next, you only owe the MCTMT for the quarter in which you exceeded the threshold.
• The rate applies to all MCTD wages: Once you cross the $312,500 threshold, the 0.34% rate applies to your entire MCTD payroll for that quarter — not just the wages above the threshold. There is no exemption for the first $312,500.
• The rate is 0.34%: This is sometimes expressed as $3.40 per $1,000 of payroll. On a $500,000 quarterly payroll, the MCTMT is $1,700.

How to Calculate the MCTMT

The MCTMT calculation is a simple three-step process:

1. Determine your total payroll for employees working in the MCTD during the calendar quarter. Include wages, salaries, bonuses, commissions, and other compensation subject to payroll tax. Only include employees whose primary work location is within the MCTD counties listed above.
2. Check whether your MCTD payroll meets the $312,500 quarterly threshold. If your total MCTD payroll is less than $312,500, you do not owe the MCTMT for that quarter. If it is $312,500 or more, proceed to step 3.
3. Multiply your total MCTD payroll by 0.34% (0.0034). The result is the MCTMT you owe for the quarter.

Calculation Examples

Note the last example: if your firm has employees in both MCTD and non-MCTD locations, only the MCTD payroll counts toward the threshold and only the MCTD payroll is subject to the 0.34% rate. Employees working in Albany (outside the MCTD) are excluded entirely from the MCTMT calculation.

How to File and Pay

The MCTMT is filed and paid through the New York State Department of Taxation and Finance — not the Department of Labor (which handles SUI). This is an important distinction because many employers assume all payroll tax filings go to the same agency.

Filing Requirements

• Form: The MCTMT is reported on Form MTA-305 (Employer’s Quarterly Metropolitan Commuter Transportation Mobility Tax Return).
• Filing frequency: Quarterly, aligned with the standard calendar quarters.
• Due dates: The return and payment are due by the last day of the month following the end of the quarter:
  • Q1 (Jan–Mar): Due April 30
  • Q2 (Apr–Jun): Due July 31
  • Q3 (Jul–Sep): Due October 31
  • Q4 (Oct–Dec): Due January 31
• Electronic filing: Most employers file electronically through the NY Tax Department’s Online Services portal. If you use PrompTax (the state’s electronic payment system for larger employers), MCTMT payments may be integrated into your existing electronic filing schedule.

Registration

Employers subject to the MCTMT must register with the New York State Department of Taxation and Finance. If you are already registered for New York State withholding tax purposes, you may already have access to file the MCTMT through your existing Online Services account. If not, you will need to register for a Business Online Services account at tax.ny.gov.

Self-Employed Individuals

The MCTMT does not only apply to employers with W-2 employees. Self-employed individuals who earn net self-employment income from activity within the MCTD are also subject to the tax, but with a different threshold and calculation:

• Threshold: Self-employed individuals with net earnings from self-employment exceeding $50,000 per year allocated to the MCTD are subject to the MCTMT.
• Rate: The rate for self-employed individuals is also 0.34% of net self-employment earnings allocated to the MCTD.
• Filing: Self-employed individuals report and pay the MCTMT on their New York State personal income tax return (Form IT-201 or IT-203), using Form MTA-6 (Metropolitan Commuter Transportation Mobility Tax — Self-Employed Individuals) as an attachment.
• Annual filing: Unlike employers who file quarterly, self-employed individuals file and pay the MCTMT annually with their state income tax return.

If you are a sole proprietor, partner, or LLC member earning more than $50,000 per year from self-employment within the MCTD, you owe this tax. Many freelancers and independent consultants operating in the NYC metro area overlook this obligation.

Why Small Businesses Miss This Tax

The MCTMT is frequently missed by small business owners in New York, and the reasons are consistent and predictable:

1. Not Knowing Their County Is in the MCTD

Many business owners in the suburban counties — particularly Orange, Dutchess, Putnam, and Rockland — do not realize they are operating within the Metropolitan Commuter Transportation District. They may think of the MCTMT as a “New York City tax” or an “MTA tax” that only applies to businesses in Manhattan or the other boroughs. In reality, the MCTD extends well beyond the five boroughs into the suburban counties served by Metro-North and the LIRR.

2. Crossing the Threshold Without Realizing It

The $312,500 quarterly payroll threshold means many small businesses are initially exempt. But as a business grows — hiring additional employees, giving raises, paying bonuses — it can cross the threshold in a particular quarter without the owner noticing. Seasonal businesses are especially vulnerable: a restaurant that adds summer staff or a retail store that ramps up for the holiday season may exceed the threshold in only one or two quarters per year.

3. Accountants Unfamiliar with the MCTD

Small business owners who use accountants or bookkeepers based outside the NYC metro area may have tax professionals who are not familiar with the MCTMT. An accountant in Albany, Syracuse, or Buffalo may not be well-versed in the geographic boundaries of the MCTD or the quarterly threshold requirements. If your accountant does not flag the MCTMT, it can go unfiled for years.

4. Confusion with Other Payroll Taxes

New York already requires employers to manage state income tax withholding, SUI (unemployment insurance), SDI (disability insurance), and PFL (Paid Family Leave). With so many payroll tax obligations already on the plate, the MCTMT — which has its own separate threshold, rate, filing form, and filing agency — can easily slip through the cracks.

5. Not Using Payroll Software That Handles MCTMT

Employers who process payroll manually or use basic software that does not account for the MCTMT may never be prompted to calculate or file it. Quality payroll platforms like automatically identify MCTMT obligations based on employee work locations and payroll totals, but only if employee locations are correctly configured.

Penalties for Non-Payment

The penalties for failing to file and pay the MCTMT are consistent with other New York State tax penalties:

• Late filing penalty: If you file late, the penalty is typically 5% of the unpaid tax for each month (or partial month) the return is late, up to a maximum of 25%.
• Late payment penalty: If you file on time but do not pay the full amount owed, a separate penalty applies — generally 0.5% of the unpaid tax per month, up to 25%.
• Interest: Interest accrues on any unpaid MCTMT from the original due date until the date of payment. The interest rate is set quarterly by the New York State Tax Department and compounds daily.
• Negligence or fraud penalties: If the state determines that the failure to file was due to negligence or intentional disregard, additional penalties of up to 25% of the underpayment may be imposed. Fraud penalties can reach 100% of the underpayment.

The longer you go without filing, the more penalties and interest accumulate. If you discover that you should have been filing the MCTMT in prior quarters or years, it is best to file the delinquent returns and pay the outstanding tax as soon as possible. The state may waive or reduce certain penalties if you come forward voluntarily — but interest is almost never waived.

Frequently Asked Questions

Is the MCTMT deducted from employee paychecks?

No. The MCTMT is an employer-paid tax. It is not withheld from employee wages and does not appear on employee pay stubs or W-2s. The employer bears the full cost of the MCTMT.

What counts as “payroll” for MCTMT purposes?

Payroll for MCTMT purposes includes wages, salaries, bonuses, commissions, and other compensation that would be subject to Social Security taxes (with some adjustments). The definition generally aligns with the wages reported for federal payroll tax purposes. Fringe benefits that are excluded from Social Security wages are typically also excluded from the MCTMT calculation.

What if I have employees in both MCTD and non-MCTD counties?

Only the payroll for employees whose primary work location is within the MCTD counts toward the $312,500 threshold and is subject to the 0.34% tax. Employees working in non-MCTD locations (such as Albany, Buffalo, or Syracuse) are excluded entirely from the MCTMT calculation.

Does the MCTMT apply to remote employees?

The MCTMT is based on where the employee performs their work, not where the employer is headquartered. If a remote employee works from home in an MCTD county, their wages would generally be included in the MCTMT calculation. However, if an employee works remotely from a location outside the MCTD, their wages would not count. Work location rules can be complex for remote and hybrid employees — consult a tax professional if your workforce is distributed.

I’m a sole proprietor with no employees. Do I owe the MCTMT?

Potentially, yes. If your net self-employment earnings from activity within the MCTD exceed $50,000 per year, you are subject to the MCTMT at the 0.34% rate. You report this on your New York State income tax return using Form MTA-6.

Can I deduct the MCTMT as a business expense?

Yes. The MCTMT is a deductible business expense for federal and New York State income tax purposes, just like other employer-paid payroll taxes. It reduces your taxable business income.

What happens if my payroll fluctuates above and below the threshold?

The MCTMT threshold is evaluated each quarter independently. If your MCTD payroll is $320,000 in Q1 but $290,000 in Q2, you owe the MCTMT for Q1 only. There is no annual averaging. Each quarter stands on its own.

Does the MCTMT apply to household employers?

Generally, no. Household employers (those employing domestic workers such as nannies, housekeepers, or caregivers) are typically not subject to the MCTMT because they are unlikely to meet the $312,500 quarterly payroll threshold. However, if a household employer somehow exceeds the threshold, the same rules apply.

Is the MCTMT the same as the NYC MTA payroll tax?

Yes. The MCTMT is sometimes informally referred to as the “MTA tax,” the “MTA payroll tax,” or the “metropolitan commuter tax.” These all refer to the same tax — the Metropolitan Commuter Transportation Mobility Tax, filed on Form MTA-305 for employers and Form MTA-6 for self-employed individuals.